Under what circumstances must the Face Foundrie Area Developer indemnify the Franchisor?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
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 Face Foundrie's 2025 Franchise Disclosure Document, the Area Developer must indemnify Face Foundrie, its owners and affiliates, and their respective officers, directors, and employees (collectively known as the "Indemnitees") against any and all causes of action, claims, losses, costs, expenses, liabilities, litigation, damages, or other expenses. This includes settlement costs and attorneys' fees. This obligation arises directly or indirectly from, as a result of, or in connection with the Area Developer's operation of the business. This indemnification requirement applies regardless of any claims that the Indemnitees are or were negligent.
Face Foundrie retains the right, but not the obligation, to manage any threatened or actual litigation, proceeding, or dispute that could affect the Indemnitees. This includes the right to choose counsel, direct the handling of the matter, and settle any claim against the Indemnitees and/or the Area Developer.
Furthermore, all vouchers, canceled checks, receipts, receipted bills, or other evidence of payments for any losses, liabilities, costs, damages, charges, or expenses incurred by any Indemnitee will be considered prima facie evidence of the Area Developer's obligation to indemnify. This means that these documents will be accepted as sufficient proof of the Area Developer's obligation unless the Area Developer can provide evidence to the contrary.
This indemnification clause is a standard provision in franchise agreements, designed to protect the franchisor from liabilities arising from the franchisee's operations. However, it places a significant financial burden on the Area Developer, who could be responsible for covering a wide range of costs and expenses, even if the Indemnitees were negligent.