What is the scope of the indemnification obligation for a Corner Bakery Cafe franchisee?
Corner_Bakery_Cafe Franchise · 2025 FDDAnswer from 2025 FDD Document
| 1. | In consideration of, and as an inducement to, the execution of the Corner Bakery Cafe |
|---|---|
| Franchise Agreement dated as of ("Agreement") by Best Cafe - Franchises, | |
| LLC ("BCF"), entered into with | ("Franchisee"), the |
| undersigned ("Guarantors"), each of whom is an officer, director or limited liability company manager of | |
| Franchisee, member of Franchisee's Continuity Group or a direct owner of a legal or beneficial interest in | |
| Franchisee ("Principal"), hereby personally and unconditionally: (1) guarantee to BCF and its successors | |
| and assigns, for the term of the Agreement and thereafter as provided in the Agreement, that Franchisee | |
| shall punctually pay and perform each and every undertaking, agreement and covenant set forth in the | |
| Agreement; (2) agree personally to be bound by the provisions of Sections 17 (Covenants) and 22 | |
| (Indemnification) of the Agreement; and (3) agree personally to be liable for the breach of Section 17 | |
| (Covenants) of the Agreement. |
Source: Item 22 — CONTRACTS (FDD page 55)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the personal guaranty agreement requires guarantors to adhere to Section 22, which pertains to indemnification. Specifically, officers, directors, limited liability company managers, members of the franchisee's Continuity Group, or direct owners of a legal or beneficial interest in the Corner Bakery Cafe franchise must agree to be personally bound by the indemnification provisions outlined in the franchise agreement. This obligation extends for the term of the agreement and beyond, as specified within the agreement itself.
This means that these individuals are personally liable for the franchisee's obligations related to indemnification. Indemnification typically involves compensating Corner Bakery Cafe for losses, damages, or liabilities arising from the franchisee's actions or breaches of the franchise agreement. The personal guaranty ensures that Corner Bakery Cafe has recourse to the personal assets of these key individuals if the franchisee fails to meet its indemnification obligations.
Prospective Corner Bakery Cafe franchisees should carefully review Section 22 of the franchise agreement to fully understand the scope of the indemnification obligations. Additionally, individuals who are considering acting as guarantors should be aware of the potential personal liability they are assuming. It is advisable to seek legal counsel to fully understand the implications of the personal guaranty and indemnification provisions before signing any agreements.