What costs are included in the definition of 'claims' for which a Card My Yard franchisee may be responsible for indemnification?
Card_My_Yard Franchise · 2025 FDDAnswer from 2025 FDD Document
For purposes of this indemnification, "claims" includes all obligations, damages (actual, consequential, exemplary or other) and costs reasonably incurred in the defense of any claim against any of the Indemnified Parties, including, without limitation, accountants', mediators', arbitrators', attorneys' and expert witness fees, costs of investigation and proof of facts, court costs, other expenses of litigation, arbitration or alternative dispute resolution and travel and living expenses. We have the right to defend any such claim against us. This indemnity will continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement. Under no circumstances will we or any other Indemnified Party be required to seek recovery from any insurer or other third party, or otherwise to mitigate our, their or your losses and expenses, in order to maintain and recover fully a claim against you. You agree that a failure to pursue such recovery or mitigate a loss will in no way reduce or alter the amounts we or another Indemnified Party may recover from you. The terms of this Article XVI. shall survive the termination, expiration or transfer of this Agreement or any interest herein.
Source: Item 23 — RECEIPTS (FDD pages 84–259)
What This Means (2025 FDD)
According to Card My Yard's 2025 Franchise Disclosure Document, the term "claims" for indemnification purposes includes a broad range of financial obligations and expenses. Specifically, it encompasses all obligations, damages (actual, consequential, exemplary, or other), and costs reasonably incurred in defending against any claim made against the Indemnified Parties.
This definition extends to various specific costs, including accountants', mediators', arbitrators', attorneys', and expert witness fees. It also covers costs associated with the investigation and proof of facts, court costs, other expenses related to litigation, arbitration, or alternative dispute resolution, as well as travel and living expenses. This means that if a Card My Yard franchisee's actions lead to a claim against Card My Yard or its affiliates, the franchisee could be responsible for covering all these enumerated costs.
The indemnification clause is quite broad, requiring the franchisee to cover costs arising from the operation of the Card My Yard business or any breach of the Franchise Agreement, regardless of the cause or negligence, unless it arises from the gross negligence or willful misconduct of Card My Yard itself. This could create a significant financial burden for franchisees if a substantial claim arises. Card My Yard also has the right to defend any claim and is not required to seek recovery from any insurer or mitigate losses before pursuing a claim against the franchisee.