Is an Ella Cafe Developer required to indemnify the Franchisor?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
breach of this Agreement; and/or Developer's development of the Coffee House including, but not limited to, claims arising out of or as a result of the maintenance and operation of vehicles or the Location (collectively, "event"), and regardless of whether the losses and expenses resulted from any strict or vicarious liability imposed by law on the Indemnitees. For the purpose of this Section 7.2., "losses and expenses" will be deemed to include compensatory, exemplary, or punitive damages; fines and penalties; attorneys' fees; experts' fees; court costs; costs associated with investigating and defending against claims; settlement amounts; judgments; compensation for damages to Franchisor's reputation and goodwill; and all other costs associated with any of the foregoing losses and expenses. Under no circumstances will Franchisor be required or obligated to seek recovery from third parties or otherwise mitigate its losses in order to maintain a claim under this provision, and Franchisor's failure to seek such recovery or mitigate its loss will in no way reduce the amounts recoverable by Franchisor under this provision. Developer must give Franchisor prompt notice of any event of which Franchise is aware, or becomes aware, for which indemnification is required, and, at Developer's expense and risk, Franchisor may elect to assume (but under no circumstance is obligated to undertake) the defense and/or settlement thereof, provided that Franchisor will seek Developer's advice and counsel. Any assumption by Franchisor will not modify Developer's indemnification obligations. Franchisor may, in its sole and absolute discretion, take such actions as it seems necessary and appropriate to investigate, defend, or settle any clam or event; or take other remedial or corrective actions with respect thereof as may be, in Franchisor's sole and absolute discretion, necessary for the protection of the Indemnitees or the System. This provision survives termination or expiration of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 50–181)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the Developer is required to indemnify the Franchisor. This means the Developer must protect the Franchisor against losses and expenses resulting from specific events. These events include any claims arising from the Developer's breach of the agreement or the development of the Coffee House, including those related to vehicle maintenance, operation of the location, and any strict or vicarious liability imposed by law on the Indemnitees.
The term "losses and expenses" is broadly defined to include compensatory, exemplary, or punitive damages; fines and penalties; attorneys' fees; experts' fees; court costs; costs associated with investigating and defending against claims; settlement amounts; judgments; compensation for damages to Ella Cafe's reputation and goodwill; and all other costs associated with any of the foregoing losses and expenses. Ella Cafe is not obligated to seek recovery from third parties or mitigate its losses to maintain a claim under this provision, and its failure to do so will not reduce the amounts recoverable from the Developer.
The Developer must promptly notify Ella Cafe of any event for which indemnification is required. Ella Cafe has the option, but not the obligation, to assume the defense and/or settlement of the claim, while seeking the Developer's advice. However, Ella Cafe's assumption of the defense does not modify the Developer's indemnification obligations. Ella Cafe has the discretion to take actions it deems necessary to investigate, defend, or settle any claim or event, or take other remedial or corrective actions to protect the Indemnitees or the System. This indemnification provision survives the termination or expiration of the agreement, meaning the Developer's responsibility to indemnify continues even after the agreement ends.