What are some examples of 'Losses' that a Cinnabon franchisee might be responsible for under the indemnification clause?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
You must defend, indemnify, and hold harmless us and our affiliates, our and their permitted successors and assigns, and each of our and their respective direct and indirect owners, directors, officers, managers, employees, agents, attorneys, and representatives (collectively, the "Indemnified Parties") from and against all Losses (defined below), which any of the Indemnified Parties may suffer, sustain, or incur as a result of a claim asserted or inquiry made formally or informally, or a legal action, investigation, or other proceeding brought, by a third party and directly or indirectly arising out of or relating to: (i) the operation of the Franchised Business; (ii) the business you conduct under this Agreement; (iii) your breach of this Agreement; (iv) your noncompliance or alleged noncompliance with any Law; or (v) any allegation that we or another Indemnified Party is a joint employer or otherwise responsible for your acts or omissions relating to your employees. "Losses" include all obligations, liabilities, damages (actual, consequential, or otherwise), and reasonable defense costs that any Indemnified Party incurs.
Defense costs include arbitrators', attorneys', and expert witness fees, costs of investigation and proof of facts, court costs, travel and living expenses, and other expenses of litigation, arbitration, or alternative dispute resolution, regardless of whether litigation, arbitration, or alternative dispute resolution is commenced.
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, franchisees have an indemnification obligation to protect Cinnabon and its related parties from various losses. These 'Losses' encompass a wide range of financial responsibilities, including obligations, liabilities, and damages, whether they are actual or consequential. Franchisees are also responsible for reasonable defense costs that Cinnabon or its affiliates might incur.
Defense costs include expenses like arbitrators', attorneys', and expert witness fees, as well as the costs associated with investigating and proving facts. Court costs, travel, living expenses, and other expenses related to litigation, arbitration, or alternative dispute resolution also fall under the franchisee's responsibility, regardless of whether a formal proceeding is initiated.
This means that if a third party brings a claim against Cinnabon that arises from the franchisee's business operations, any business conducted under the agreement, a breach of the agreement, noncompliance with laws, or allegations related to the employment of the franchisee's employees, the franchisee will be required to cover all associated costs and damages incurred by Cinnabon. This indemnification clause highlights the importance of franchisees adhering to all legal and contractual obligations to minimize potential financial exposure.