Does the Burros Fries franchisee's indemnification obligation extend to claims made directly against the franchisor by the franchisee?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
nst claims; settlement amounts, judgments, compensation for damages to our reputation and goodwill; and all other costs associated with any of the foregoing claims, losses or obligations.
Franchisee shall defend, indemnify and hold us and our officers, owners, agents, directors, shareholders and employees harmless from all fines, suits, proceedings, claims (including but not limited to, any safety and security claims, claims of injury, claims of theft, claims of neglect, abuse, death, vicarious or other liability), demands, actions, losses, damages, costs, expenses, fees (including legal fees, disbursements and related expenses), penalties and/or any other liability of any kind or nature, however arising out of or otherwise connected with and/or related to any act, error and/or omission of Franchisee (including Franchisee's ownership, operation, training of Employees and/or management of the Franchised Business); and/or any referral,service provider, supplier or other agent/independent contractor or employee of Franchisee including acts, errors or omissions committed or incurred, negligent or intentional acts in connection with Franchisee's operation of the Business; libel, slander or any other form of defamation by Franchisee and any infringement, violation or alleged infringement or violation of any Name, Mark, patent or copyright or any misuse of the Confidential Information. This provision includes any liability arising from labor or employment law violations as well as any liability related to joint employer claims. This provision includes all claims as indicated above, of ours, directly against Franchisee (without a third-party involvement) due to acts or omissions of Franchisee or us in which we suffer damages including but not limited to, harm to our goodwill and reputation.
We will have the right to control all litigation, including selection and management of counsel, and to defend and/or settle any claim, against and/or including us and/or our-related persons/entities, or affecting our and/or their interests with no obligation to Franchisee and without affecting our rights under this indemnity or otherwise. Franchisee may appoint separate independent counsel to represent Franchisee's interest in such suits, proceedings, claims, etc., all at Franchisee's expense. Franchisee's indemnification obligations survive termination of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to the 2024 Burros Fries Franchise Disclosure Document, the franchisee's indemnification obligations do extend to claims made directly against Burros Fries by the franchisee. Specifically, the franchisee must defend, indemnify, and hold harmless Burros Fries and its related parties from various liabilities. These liabilities include fines, suits, proceedings, claims, losses, damages, costs, expenses, fees, penalties, and any other liability arising from the franchisee's acts or omissions in operating the franchised business.
This indemnification extends to claims made directly against Burros Fries by the franchisee, without third-party involvement, if Burros Fries suffers damages due to the franchisee's actions or omissions. These damages include harm to Burros Fries' goodwill and reputation. Burros Fries retains the right to control all litigation, including selecting counsel and settling claims, without any obligation to the franchisee.
In practical terms, this means that if a Burros Fries franchisee's actions or omissions lead to a claim against Burros Fries, even directly from the franchisee, the franchisee is responsible for covering the associated costs. This includes legal fees and any damages awarded. This obligation survives the termination of the Franchise Agreement, meaning the franchisee could still be liable for actions taken during the franchise term even after the agreement ends.
This type of clause is relatively standard in franchise agreements, as it protects the franchisor from liabilities arising from the franchisee's operation of the business. However, prospective franchisees should carefully consider the scope of this indemnification and understand that they could be responsible for significant costs if their actions result in claims against Burros Fries.