What costs are included in the claims for which a Floyds 99 franchisee must indemnify the franchisor?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchisee shall indemnify, defend and hold harmless the Franchisor, its subsidiaries, parents and affiliates, and their respective shareholders, equity owners, partners, directors, officers, managers, members, employees, agents, representatives, successors and assigns (the "Indemnified Parties"), against, and to reimburse them for all claims, obligations, fines, suits, proceedings, demands, actions of any kind and nature, and damages described in this Section 21.3, any and all obligations described in Section 21.2 and any and all claims and liabilities directly or indirectly arising out of or is based upon or related to this Agreement, the operation of the FLOYD'S 99 Shop or arising out of all acts and omissions of the Franchisee and its employees related to labor or employment practices, failure to comply with any applicable laws or regulations, or the use of the Marks and Licensed Methods in any manner not in accordance with this Agreement.
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 any claims Franchisee brings 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.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to Floyds 99's 2025 Franchise Disclosure Document, the franchisee is required to indemnify, defend, and hold harmless the franchisor and its related parties from various claims, obligations, fines, suits, proceedings, demands, and actions. This indemnification extends to all obligations outlined in Section 21.2 of the agreement, which primarily concerns the franchisee's responsibility for payments to third parties, including lenders, government agencies, and vendors, as well as taxes levied on the franchisee or the Floyds 99 shop.
The franchisee's indemnification also covers claims and liabilities arising from the franchise agreement, the operation of the Floyds 99 shop, and the acts or omissions of the franchisee and its employees related to labor or employment practices. This includes any failure to comply with applicable laws or regulations and the use of the franchisor's marks and licensed methods in a manner not in accordance with the agreement. The claims for which the franchisee must indemnify the franchisor include all obligations, actual and consequential damages, and costs reasonably incurred in defending against any claim, including accountant, attorney, and expert witness fees, investigation costs, court costs, litigation expenses, and travel and living expenses.
Essentially, the franchisee bears the financial responsibility for any legal or financial issues that arise from their operation of the Floyds 99 shop, their relationships with employees and vendors, and their adherence to laws and the franchise agreement. This is a broad indemnification clause that places significant risk on the franchisee, as they could be responsible for substantial costs if the franchisor faces claims related to the franchisee's business. Prospective franchisees should carefully consider this indemnification clause and seek legal counsel to fully understand its implications.