What does Note 4 refer to regarding indemnification for a Burros Fries franchise?

According to Burros Fries's 2024 Franchise Disclosure Document, Note 4, as referenced in Item 6 regarding other fees, pertains to indemnification. It specifies that franchisees are required to protect, defend, indemnify, and hold Burros Fries harmless from any claims, lawsuits, or losses that arise from the operation of their franchised business. This means that if a customer sues Burros Fries because of something that happened at a franchisee's location, the franchisee is responsible for covering Burros Fries's legal costs and any resulting damages.

Furthermore, Note 4 states that if a franchisee defaults on the franchise agreement and Burros Fries has to hire an attorney for collection or enforcement, the franchisee must pay all of Burros Fries's damages, legal fees, and costs, as permitted by law. The FDD clarifies that these indemnification costs are imposed and collected solely by Burros Fries. The amount of these costs can vary, depending on the specific claims, lawsuits, and losses that Burros Fries incurs due to the franchisee's operation of the business.

In essence, this indemnification clause places a significant financial responsibility on the Burros Fries franchisee. It's important for prospective franchisees to understand that they could be liable for substantial costs if their business operations lead to legal claims against Burros Fries. Franchisees should consult with a legal professional to fully understand the scope of this indemnification and how to mitigate potential risks through insurance and careful business practices.