What specific costs are included in the definition of 'claims' for which a Fat Shack franchisee must indemnify the Indemnified Parties?
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, the franchisee is responsible for indemnifying the Indemnified Parties. The term "claims" includes all obligations, actual and consequential damages, and costs reasonably incurred in defending against any claim. These costs specifically include, but are not limited to, reasonable accountants', attorneys', and expert witness fees.
Furthermore, the definition of "claims" also encompasses costs of investigation, proof of facts, court costs, other litigation expenses, and travel and living expenses. This means that if a third party brings a claim against Fat Shack or its related parties due to the franchisee's actions, the franchisee is responsible for covering all associated expenses, including legal and investigative costs.
This indemnification clause places a significant financial burden on the Fat Shack franchisee. It is crucial for prospective franchisees to understand the scope of this obligation and to ensure they have adequate insurance coverage and legal counsel to protect themselves against potential claims. The franchisee is responsible for these costs, even if the claim arises from the acts or omissions of the franchisee's authorized representatives.