Will a City Publications franchisee be required to indemnify the franchisor for liability resulting from reliance on procedures required by the franchisor?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees to hold harmless and indemnify Franchisor and its Affiliates and Franchisor's respective members, partners, shareholders, officers, directors, employees and agents and successors or assigns (collectively "Franchisor Indemnitees") from and against all losses, damages, fines, costs, expenses, lost profits, loss, damages, or liability (including attorneys' fees and all other costs of litigation) incurred in connection with any action, suit, demand, claim, investigation, proceeding or inquiry, or any settlement thereof which arises from or is based upon (a) Franchisee's ownership or operation of the Franchised Business; (b) violation, breach or asserted violation or breach of any federal, state or local law, regulation or rule; (c) breach of any representation, warranty, covenant, or provision of this Agreement or any other agreement between Franchisee on the one hand and Franchisor or Franchisor's Affiliates on the other; (d) libel, slander or other form of defamation of Franchisor or the System by Franchisee; (e) acts, errors or omissions incurred in connection with or arising out of the Franchised Business, including any negligent or intentional acts; or (f) infringement, violation or alleged infringement or violation of any Mark, patent or copyright or any misuse of the Confidential Information. In addition, Franchisee shall indemnify Franchisor Indemnitees for any and all losses, compensatory damages, exemplary or punitive damages, fines, charges, costs, expenses, lost profits, settlement amounts, judgments, damages to Franchisor's reputation and goodwill, costs of advertising material, media time and space and substituting and replacing the same, all costs of recall, refunds, compensation, all public notices and other such amounts which may arise or result from any of the actions, commissions or items listed in this Section.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, the franchisee is required to indemnify the franchisor under certain conditions.
Specifically, the franchisee must hold harmless and indemnify City Publications and its affiliates, as well as their members, partners, shareholders, officers, directors, employees, agents, successors, and assigns from losses, damages, fines, costs, expenses, lost profits, or liability (including attorney's fees and litigation costs). This indemnification extends to any action, suit, demand, claim, investigation, proceeding, or inquiry, or any settlement related to it, that arises from several factors. These include the franchisee's ownership or operation of the franchised business, any violation of laws or regulations, breach of the franchise agreement, defamation of City Publications, acts or omissions related to the franchised business (including negligence or intentional acts), or infringement of intellectual property.
The franchisee's indemnification responsibility also covers compensatory, exemplary, or punitive damages, fines, charges, costs, lost profits, settlement amounts, damages to City Publications' reputation and goodwill, costs of advertising, recall costs, refunds, and public notices resulting from the items listed above.
This means that a City Publications franchisee takes on significant financial responsibility for any legal or financial repercussions stemming from their operation of the franchise, and this responsibility extends broadly to cover various potential liabilities. However, the FDD does not explicitly state whether this indemnification extends to liabilities resulting from reliance on procedures required by the franchisor. A prospective franchisee should seek clarification from City Publications regarding this specific scenario.