Is the 1-800-GOT-JUNK? franchisee required to pay taxes imposed upon them but collected by the franchisor?
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, including taxes, arising from the operation of their franchised business. This means a franchisee could be required to cover 1-800-GOT-JUNK?'s losses resulting from the franchisee's business operations. However, the franchisee is not required to indemnify 1-800-GOT-JUNK? for claims resulting solely from 1-800-GOT-JUNK?'s breach of the agreement or other wrongs they commit.
This requirement to indemnify 1-800-GOT-JUNK? includes protection against liabilities, obligations, consequential damages, taxes, costs, losses, and actual legal expenses related to any claim, litigation, or action arising from the franchisee's business. This could potentially include taxes that are imposed upon the franchisee but collected by 1-800-GOT-JUNK?, if those taxes are considered a liability arising out of the franchisee's business operation.
However, the enforceability of this indemnification provision may vary by jurisdiction. For example, in Kansas, this provision may not be enforceable unless it is separately negotiated and deemed reasonable. The addendum to the franchise agreement for Kansas-based franchisees requires a separate acknowledgement that the franchisee has considered the indemnity and consulted legal counsel, agreeing that it is reasonable. Prospective franchisees should consult with legal counsel to fully understand the implications of the indemnification clause and how it applies in their specific state or territory.