Is the 1-800-GOT-JUNK? franchisee required to pay taxes on fees collected by the franchisor from the franchisee?
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)
According to the 2025 1-800-GOT-JUNK? Franchise Disclosure Document, franchisees are generally responsible for indemnifying 1-800-GOT-JUNK? against various liabilities, obligations, and damages arising from the operation of their franchised business. This includes consequential damages, costs, losses, and actual legal expenses. Crucially, this also extends to taxes. Therefore, a 1-800-GOT-JUNK? franchisee may be responsible for taxes related to the operation of their franchise.
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 committed by them. This provides a specific carve-out, protecting the franchisee from liabilities caused directly by 1-800-GOT-JUNK?'s actions.
It's important to note that in certain states like Kansas, this indemnification provision may not be enforceable unless it is separately negotiated and deemed reasonable. The addendum to the franchise agreement specifies that the franchisee agrees they have separately considered this indemnity and had the opportunity to consult legal counsel, affirming its reasonableness. This highlights the importance of franchisees seeking legal advice to fully understand the implications of such clauses and their enforceability in their specific jurisdiction.