What is included in the definition of 'Losses' for which a Cinnabon franchisee may be required to indemnify the Indemnified Parties?
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 the 2025 Cinnabon Franchise Disclosure Document, franchisees must defend, indemnify, and hold harmless Cinnabon and its affiliates, successors, assigns, owners, directors, officers, managers, employees, agents, attorneys, and representatives (collectively, the "Indemnified Parties") from all "Losses." These "Losses" are those that any of the Indemnified Parties may suffer, sustain, or incur as a result of a third-party claim, inquiry, legal action, investigation, or other proceeding. These claims must directly or indirectly arise out of or relate to: the operation of the franchised Cinnabon business, the business the franchisee conducts under the Franchise Agreement, the franchisee's breach of the Franchise Agreement, the franchisee's noncompliance or alleged noncompliance with any law, or any allegation that Cinnabon or another Indemnified Party is a joint employer or otherwise responsible for the franchisee's acts or omissions relating to the franchisee's employees.
"Losses" specifically include all obligations, liabilities, damages (actual, consequential, or otherwise), and reasonable defense costs that any Indemnified Party incurs. Defense costs encompass arbitrators', attorneys', and expert witness fees, costs of investigation and proof of facts, court costs, travel and living expenses, and other expenses related to litigation, arbitration, or alternative dispute resolution, regardless of whether such proceedings are formally commenced.
This indemnification clause means that a Cinnabon franchisee could be financially responsible for a wide range of costs and damages incurred by Cinnabon due to the franchisee's business operations, breaches of contract, or failure to comply with laws. The franchisee's obligation to indemnify Cinnabon extends to covering legal fees and other expenses, even if a formal lawsuit or arbitration is not initiated. However, the franchisee is not required to indemnify Cinnabon for losses or liabilities caused by Cinnabon's negligence, willful misconduct, strict liability, or fraud, as this provision is modified by Washington state law.