Who are the 'Indemnified Parties' that a Fat Shack franchisee must indemnify, defend, and hold harmless?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees to indemnify, defend and hold harmless FSI, its subsidiaries and affiliates, and their respective shareholders, directors, members, managers, officers, managers, members, employees, agents, successors and assigns (the "Indemnified Parties") against, and to reimburse them for all claims, obligations and damages described in this Section 20.3, any and all third party obligations described in Section 20.2, any amounts that FSI spends curing any default of Franchisee under this Agreement or any third party agreement if FSI, in its sole discretion, elects to cure such default, and any and all claims and liabilities directly or indirectly arising out of the operation of the FAT SHACK Restaurant, the use of the Marks and Licensed Methods in any manner, or the violation of any laws including labor and employment laws in the FAT SHACK Restaurant, unless (and then only to the extent) caused by the Indemnified Party's negligence. This indemnity includes any claims arising from the acts or omissions of Franchisee's Authorized Representatives. For purposes of this indemnification, "claims" shall mean and include all obligations, actual and consequential damages and costs reasonably incurred in the defense of any claim against the Indemnified Parties, including, without limitation, reasonable accountants', attorneys' and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and travel and living expenses. Each Indemnified Party shall have the right to defend any such claim against it at Franchisee's expense and agree to settlements or any other actions. This indemnity shall continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, a franchisee is obligated to indemnify, defend, and hold harmless specific parties, referred to as the "Indemnified Parties." These parties include FSI (presumably Fat Shack International, the franchisor), its subsidiaries and affiliates, and their respective shareholders, directors, members, managers, officers, employees, agents, successors, and assigns. This requirement extends to any claims, obligations, and damages outlined in Section 20.3 of the franchise agreement, as well as any third-party obligations described in Section 20.2.
This indemnification clause means that the Fat Shack franchisee is financially responsible for covering any losses, damages, or legal costs incurred by the Indemnified Parties that arise from the franchisee's operation of the Fat Shack restaurant. This includes claims arising from the use of Fat Shack's trademarks and licensed methods, or any violation of laws, including labor and employment laws, unless the issue is caused by the negligence of the Indemnified Parties themselves. The franchisee's responsibility extends to claims arising from the actions or omissions of their authorized representatives.
The definition of "claims" for indemnification purposes is broad, encompassing all obligations, actual and consequential damages, and costs reasonably incurred in defending against any claim. This includes, but is not limited to, reasonable accountants', attorneys', and expert witness fees, costs of investigation, court costs, other litigation expenses, and travel and living expenses. Each Indemnified Party has the right to defend any claim against it at the franchisee's expense and can agree to settlements or other actions.
This indemnification obligation remains in effect even after the franchise agreement expires or is terminated. This is a standard practice in franchising, designed to protect the franchisor from liabilities arising from the franchisee's business operations. Prospective Fat Shack franchisees should carefully consider the potential financial implications of this indemnification clause and consult with a legal advisor to fully understand their obligations.