Does the indemnification obligation of a Floyds 99 franchisee extend to the franchisor's subsidiaries and affiliates?
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.
The Franchisor shall have the right to defend any such claim against it.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to the 2025 Floyds 99 Franchise Disclosure Document, the franchisee's indemnification obligations do extend to the franchisor, its subsidiaries, parents, and affiliates. This means a Floyds 99 franchisee is responsible for defending and protecting these related parties from certain claims and liabilities.
The franchisee must 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"). This obligation covers all claims, obligations, fines, suits, proceedings, demands, and actions of any kind, as well as damages described in Section 21.3 of the agreement, obligations in Section 21.2, and any claims or liabilities arising from the agreement, the operation of the Floyds 99 shop, or the franchisee's acts and omissions related to labor or employment practices. It also includes failures to comply with laws or regulations, or the misuse of the Marks and Licensed Methods.
This indemnification covers all obligations, actual and consequential damages, and costs incurred in defending any claim against the Indemnified Parties, including legal fees, investigation costs, court costs, and other litigation expenses. Floyds 99 has the right to defend any such claim. This is a significant responsibility for the franchisee, as it could involve substantial financial exposure depending on the nature and extent of the claims. Franchisees should carefully review the scope of this indemnification and understand the potential liabilities involved.
In practical terms, if a customer sues Floyds 99 (the franchisor) due to an incident at a franchisee's shop, and the incident is related to the franchisee's actions or failure to comply with regulations, the franchisee may be required to cover Floyds 99's legal costs and any damages awarded to the customer. This is a common clause in franchise agreements, designed to protect the franchisor from liabilities arising from the franchisee's operations. Prospective franchisees should consult with a legal professional to fully understand the implications of this indemnification clause.