What parties are included in the definition of "Indemnified Parties" that Cinnaholic franchisees must indemnify?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees to indemnify, defend and hold harmless Franchisor and its affiliates, shareholders, directors, officers, employees, agents, successors and assignees (the "Indemnified Parties") against and to reimburse any one or more of the Indemnified Parties for all claims, obligations and damages described in this Section, any taxes described in Section 18.3 below and any claims and liabilities directly or indirectly arising out of the Bakery's operation or Franchisee's breach of this Agreement, except to the extent they arise as a result of Franchisor's own gross negligence or willful misconduct. For purposes of this indemnification, "claims" includes all obligations, damages (actual, consequential or otherwise) and costs reasonably incurred in the defense of any claim against any of the Indemnified Parties, including reasonable accountants', arbitrators', attorneys' and expert witness fees, costs of investigations and proof of facts, court costs, other expenses of litigation, arbitration or alternative dispute resolution and travel and living expenses. Franchisor has the exclusive right to defend any such claim. This indemnity will continue in effect after the expiration or termination of this Agreement. Under no circumstances will Franchisor or any other Indemnified Party be required to seek recovery from any insurer or other third party, or otherwise to mitigate its or their losses and expenses, in order to maintain and recover fully a claim against Franchisee.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the "Indemnified Parties" that a franchisee agrees to indemnify, defend, and hold harmless include Cinnaholic and its affiliates. This extends to Cinnaholic's shareholders, directors, officers, employees, agents, successors, and assignees.
This indemnification clause means that a Cinnaholic franchisee could be responsible for covering claims, obligations, and damages that arise from the bakery's operation or the franchisee's breach of the Franchise Agreement. This includes taxes and any claims or liabilities that indirectly or directly arise from these situations. However, the franchisee is not responsible for losses or liabilities caused by the negligence, willful misconduct, strict liability, or fraud of the indemnified party.
The definition of "claims" is broad, encompassing all obligations, damages (both actual and consequential), and costs reasonably incurred in defending against any claim. This includes fees for accountants, arbitrators, attorneys, and expert witnesses, as well as costs related to investigations, proof of facts, court costs, and expenses for litigation, arbitration, or alternative dispute resolution. It also covers travel and living expenses.
Cinnaholic retains the exclusive right to defend any claim, and this indemnification obligation continues even after the Franchise Agreement expires or is terminated. The document specifies that Cinnaholic or any other Indemnified Party is not required to seek recovery from any insurer or third party to mitigate losses before making a claim against the franchisee. This could place a significant financial burden on the franchisee, as they may be liable for a wide range of costs and damages.