What is the meaning of 'Indemnification' in the Face Foundrie Area Development Agreement?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12.4 Indemnification.
Area Developer shall indemnify and hold Franchisor, Franchisor's owners and affiliates, and their respective officers, directors, and employees (the "Indemnitees") harmless against any and all causes of action, claims, losses, costs, expenses, liabilities, litigation, damages or other expenses (including, but not limited to, settlement costs and attorneys' fees) arising directly or indirectly from, as a result of, or in connection with Area Developer's operation of the business contemplated hereunder (notwithstanding any claims that the Indemnitees are or were negligent).
Area Developer agrees that with respect to any threatened or actual litigation, proceeding or dispute which could directly or indirectly affect any of the Indemnitees, the Indemnitees shall have the right, but not the obligation, in their discretion, to: (i) choose counsel, (ii) direct, manage and/or control the handling of the matter; and (iii) settle on behalf of the Indemnitees, and/or Area Developer, any claim against the Indemnitees.
All vouchers, canceled checks, receipts, receipted bills or other evidence of payments for any such losses, liabilities, costs, damages, charges or expenses of whatsoever nature incurred by any Indemnitee shall be taken as prima facie evidence of Area Developer's obligation hereunder.
Source: Item 23 — RECEIPTS (FDD pages 74–257)
What This Means (2025 FDD)
According to the 2025 Face Foundrie Franchise Disclosure Document, the Area Developer is responsible for indemnifying Face Foundrie and its related parties. This means the Area Developer must protect and compensate Face Foundrie, its owners, affiliates, officers, directors, and employees (collectively known as "Indemnitees") from any legal actions, claims, losses, costs, expenses, liabilities, litigation, damages, or other expenses, including settlement costs and attorneys' fees. This obligation arises directly or indirectly from the Area Developer's operation of the Face Foundrie business, even if the Indemnitees are claimed to be negligent.
In practice, this clause means that if someone sues Face Foundrie because of something the Area Developer did or failed to do in their business operations, the Area Developer is responsible for covering Face Foundrie's legal costs and any resulting damages. Face Foundrie has the right to choose legal counsel, manage the handling of the legal matter, and settle any claims against them, which could also bind the Area Developer.
Furthermore, any documented evidence of payments made by Face Foundrie for such losses or expenses will be considered proof of the Area Developer's obligation to reimburse them. This indemnification clause places a significant financial responsibility on the Area Developer, as they could be liable for substantial costs arising from their business operations. It is a common practice in franchising for franchisees or area developers to indemnify the franchisor, reflecting the franchisor's need to protect itself from liabilities arising from the independent operations of its franchisees.