Does the 1-800-GOT-JUNK? franchisee have to pay taxes promptly when due?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 22 of the Franchise Agreement states that you will indemnify and hold us, and our subsidiaries, affiliates, shareholders, directors, officers, employees, agents, assignees and other franchisees; harmless against all liabilities, obligations, and consequential damages, taxes, costs, losses and actual legal expenses; any claim, litigation or other action or proceeding arising out of the operation of the franchised business.
However, you are not required to indemnify us for claims resulting solely from our breach of this Agreement or other wrongs we commit.
This provision may not be enforceable in Kansas unless separately negotiated and reasonable.
By signing this Addendum, you hereby agree that you separately considered and had an opportunity to consult legal counsel concerning this indemnity, and that you consider it reasonable.
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Section 22 of the Franchise Agreement for 1-800-GOT-JUNK? states that franchisees may have to indemnify the franchisor against liabilities, obligations, damages, taxes, costs, losses, and legal expenses arising from the operation of the franchised business. This means a franchisee could be responsible for covering the franchisor's losses related to the franchisee's business operations, including tax liabilities. However, the franchisee is not required to indemnify 1-800-GOT-JUNK? for claims resulting solely from the franchisor's breach of the agreement or other wrongs they commit. This indemnification clause may not be enforceable in Kansas unless separately negotiated and deemed reasonable. Franchisees in Kansas must acknowledge they had the opportunity to consult legal counsel regarding this indemnity and consider it reasonable.
This requirement to indemnify the franchisor has significant implications for prospective 1-800-GOT-JUNK? franchisees. It means that if the franchised business incurs tax liabilities or other financial obligations, the franchisee might be legally obligated to cover those costs, even if they are technically the franchisor's responsibility. This could place a substantial financial burden on the franchisee and increase the risk associated with operating the franchise.
Franchisees should seek legal counsel to fully understand the scope and implications of the indemnification clause, especially in states like Kansas where specific conditions apply. They should also carefully manage their business operations to minimize the risk of incurring liabilities that could trigger the indemnification requirement. It is common practice for franchise agreements to include indemnification clauses, but the specific terms and conditions can vary widely. Therefore, franchisees must carefully review and negotiate these clauses to protect their interests and limit their potential financial exposure.
It is important to note that this addendum to the franchise agreement is specific to franchisees in Kansas. The document states that the franchisee must agree that they separately considered and had an opportunity to consult legal counsel concerning this indemnity, and that they consider it reasonable. This suggests that the franchisor is aware that this provision may not be enforceable in Kansas unless these conditions are met.