Is a Desi District franchisee obligated to indemnify an Indemnitee for actions arising from the Indemnitee's negligence?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
- 16.1 Indemnity. Franchisee shall indemnify and defend (with counsel reasonably acceptable to Desi District Franchise Group) Desi District Franchise Group, its parent entities, subsidiaries and affiliates, and their respective owners, directors, officers, employees, agents, successors and assignees (collectively, "Indemnitees") against all Losses in any Action by or against Desi District Franchise Group and/or any Indemnitee directly or indirectly related to, or alleged to arise out of, the operation of the Business. Notwithstanding the foregoing, Franchisee shall not be obligated to indemnify an Indemnitee from Actions arising as a result of any Indemnitee's intentional misconduct or negligence. Any delay or failure by an Indemnitee to notify Franchisee of an Action shall not relieve Franchisee of its indemnity obligation except to the extent (if any) that such delay or failure materially prejudices Franchisee. Franchisee shall not settle an Action without the consent of the Indemnitee. This indemnity will continue in effect after this Agreement ends.
- 16.2 Assumption. An Indemnitee may elect to assume the defense of any Action subject to this indemnification, and control all aspects of defending the Action, including negotiations and settlement, at Franchisee's expense. Such an undertaking shall not diminish Franchisee's obligation to indemnify the Indemnitees.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, a franchisee is generally required to indemnify Desi District Franchise Group and related parties (Indemnitees) against losses from actions related to the operation of the business. However, the franchisee is not obligated to indemnify an Indemnitee for actions arising from the Indemnitee's own intentional misconduct or negligence. This means that if Desi District or its related parties are negligent, the franchisee is not responsible for covering their losses.
This provision offers some protection to the franchisee, as they are not liable for the franchisor's own negligence. However, the franchisee remains responsible for actions related to the business's operation, emphasizing the importance of careful management and adherence to operational standards. The franchisee is responsible for indemnifying Desi District for any losses that occur as a result of the franchisee's operation of the business.
The indemnity obligation continues even after the franchise agreement ends, indicating a long-term responsibility for the franchisee. Any delay or failure by an Indemnitee to notify Franchisee of an Action shall not relieve Franchisee of its indemnity obligation except to the extent (if any) that such delay or failure materially prejudices Franchisee. The franchisee cannot settle an action without the consent of the Indemnitee. Desi District also has the option to assume the defense of any action and control all aspects of defending the action at the franchisee's expense, which does not diminish the franchisee's obligation to indemnify the indemnitees.