What is the scope of actions that the My Salon Suite depositor must defend at their own cost and expense?
My_Salon_Suite Franchise · 2025 FDDAnswer from 2025 FDD Document
The Depositor agrees with respect to any action taken pursuant to the above authorization:
- (3) To defend at Depositor's own cost and expense any action which might be brought by a depositor or any other persons because of any actions taken by the Depository or Payee pursuant to the foregoing request and authorization, or in any manner arising by reason of the Depository's or Payee's participation therein.
Source: Item 23 — RECEIPTS (FDD pages 95–230)
What This Means (2025 FDD)
According to the 2025 FDD, the My Salon Suite depositor is responsible for defending, at their own cost and expense, any legal action brought against the depository or payee. This responsibility arises from actions taken by the depository or payee based on the depositor's authorization for electronic fund transfers. This indemnification clause is part of the agreement the depositor makes when authorizing electronic debits from their account to the payee, Suite Management Franchising, LLC.
In practical terms, this means that if a customer or another party sues the bank (depository) or My Salon Suite (payee) due to any debit transaction made under the depositor's authorization, the depositor is legally obligated to cover the costs of defending that lawsuit. This includes legal fees, court costs, and any other expenses associated with the defense. The obligation exists regardless of the merit of the claim; the depositor is responsible simply because the action arises from the authorization they provided.
This requirement places a potentially significant financial burden on the My Salon Suite depositor. It is crucial for depositors to understand the scope of this obligation and to assess their risk tolerance. They should also ensure they have adequate insurance coverage or financial resources to handle such a situation. Franchisees should consult with a legal and financial advisor to fully understand the implications of this clause before signing the authorization form.