Does the indemnification obligation for City Publications extend to violations of local laws or regulations?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
B. Indemnification
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's indemnification obligations do extend to violations of local laws and regulations. Specifically, the franchisee must indemnify City Publications and its affiliates against losses, damages, fines, costs, and expenses arising from any claim based upon the franchisee's violation or asserted violation of any federal, state, or local law, regulation, or rule. This includes attorneys' fees and all other costs of litigation.
This means that if a City Publications franchisee violates a local ordinance, such as a zoning law or a business licensing requirement, and this violation leads to a claim or legal action against City Publications, the franchisee is responsible for covering City Publications' associated costs. The franchisee's responsibility extends to a wide array of potential issues related to the operation of the franchised business.
Furthermore, the franchisee's indemnification extends beyond direct violations to include 'asserted' violations. This means that even if the franchisee is ultimately found not to be in violation, they may still be responsible for City Publications' legal costs if a claim is made. This broad indemnification clause highlights the importance of franchisees maintaining full compliance with all applicable laws and regulations to minimize their potential financial exposure.
In addition to direct costs like attorney's fees, the franchisee is also responsible for compensatory damages, exemplary or punitive damages, fines, charges, costs, lost profits, settlement amounts, damages to City Publications' 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.