What losses does the Southern Steer franchisee indemnify the Depository from?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
The Depositor agrees with respect to any action taken pursuant to the above authorization:
- (1) To indemnify the Depository and hold it harmless from any loss it may suffer resulting from or in connection with any debit including, without limitation, execution and issuance of any check, draft or order, whether or not genuine, purporting to be authorized or executed by the Payee and received by the Depository in the regular course of business for the purpose of payment, including any costs or expenses reasonably incurred in connection therewith.
- (2) To indemnify the Payee and the Depository for any loss arising in the event that any such debit will be dishonored, whether with or without cause and whether intentionally or inadvertently.
- (3) To defend, at the Depositor's own cost and expense, any action which might be brought by any persons or Entities because of any actions taken by the Depository or the Payee pursuant to the foregoing request and authorization, or in any manner arising by reason of the Depository's or the Payee's participation therein.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, the franchisee agrees to indemnify the Depository (likely the bank or financial institution handling electronic fund transfers) and hold it harmless from any loss it may suffer resulting from or connected with any debit. This includes the execution and issuance of any check, draft, or order, whether or not genuine, purporting to be authorized or executed by the Payee (Southern Steer Franchising International, LLC) and received by the Depository in the regular course of business for the purpose of payment, including any costs or expenses reasonably incurred in connection therewith.
In addition, the franchisee must indemnify both the Payee and the Depository for any loss arising if any debit is dishonored, regardless of the reason (with or without cause, intentionally or inadvertently). This means that if a payment bounces or is rejected for any reason, the franchisee is responsible for covering the resulting losses incurred by Southern Steer and the Depository.
Furthermore, the franchisee is obligated to defend, at their own cost and expense, any legal action brought by any person or entity due to actions taken by the Depository or the Payee based on the authorization. This includes actions arising from the Depository's or the Payee's participation in the electronic funds transfers. This clause places a significant responsibility on the franchisee to cover legal costs associated with disputes arising from these transactions, even if the franchisee is not directly at fault.
This indemnification clause is a standard practice in franchising to protect the franchisor and related entities from financial losses and legal liabilities arising from the franchisee's business operations. Prospective Southern Steer franchisees should carefully consider the potential financial burden of this indemnification, particularly the obligation to cover legal costs and losses from dishonored payments, and factor it into their financial planning.