To what extent must an Embassy Suites franchisee indemnify the Indemnified Parties regarding liabilities arising from the sale or offer of securities?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
14.1.3 any claimed occurrence at the Hotel including personal injury, death or property damage;
14.1.4 your alleged or actual infringement or violation of any copyright, industrial design, patent, service mark, trademark or other proprietary right owned or controlled by third parties;
14.1.5 your alleged or actual violation or breach of any contract (including any group sales agreement for the System), any Law, or any industry standard;
14.1.6 any business conducted by you or a third party in, on or about the Hotel or Hotel Site;
14.1.7 your failure to comply with Subsection 16.13, including a breach of the representations set forth therein; and
14.1.8 any inquiry, investigation, suit, action, or proceeding arising out of or in connection with any fees or costs charged to patrons or guests by you, and if you acquired the Hotel in a Change of Ownership Transfer, by the previous owner (your transferor) before you acquired ownership of the Hotel.
14.2 You do not have to indemnify an Indemnified Party to the extent damages otherwise covered under this Section 14 are adjudged by a final, non-appealable judgment of a court of competent jurisdiction to have been solely the result of the gross negligence or willful misconduct of that Indemnified Party, and not any of the acts, errors, omissions, negligence or misconduct of you or anyone related to you or the Hotel.
You may not rely on this exception to your indemnity obligation if the claims were asserted against us or any other Indemnified Party on the basis of theories of imputed or secondary liability, such as vicarious liability, agency, or apparent agency, or our failure to compel you to comply with the provisions of this Agreement, including compliance with Standards, Laws or other requirements.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
Based on the 2025 Embassy Suites Franchise Disclosure Document, the franchisee's obligation to indemnify the Indemnified Parties does not explicitly cover liabilities arising from the sale or offer of securities. However, the document outlines various scenarios where indemnification is required, such as occurrences at the hotel, infringement of proprietary rights, breach of contract or law, business conducted at the hotel, failure to comply with specific obligations, and inquiries related to fees charged to guests.
The franchisee is not required to indemnify an Indemnified Party if damages result solely from the gross negligence or willful misconduct of that Indemnified Party, as determined by a final, non-appealable judgment. This exception does not apply if claims are based on imputed or secondary liability, such as vicarious liability or agency, or the franchisor's failure to enforce compliance with the agreement.
Prospective Embassy Suites franchisees should note that the indemnification clause is broad, covering various potential liabilities. It is crucial to understand the circumstances under which indemnification is required and the limitations of the exception for gross negligence or willful misconduct. Given the absence of explicit mention of liabilities from the sale or offer of securities, it would be prudent for potential franchisees to seek clarification from the franchisor regarding this specific area of potential liability and consider seeking legal counsel to fully understand their obligations.