Does the Guarantor's guarantee to 1-800-GOT-JUNK? include the Franchisor's legal fees?
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, it is not possible to determine definitively whether the Guarantor's guarantee to 1-800-GOT-JUNK? includes the franchisor's legal fees. While the FDD includes a Guarantee Agreement as Exhibit F, and discusses the obligations of the guarantor, it does not explicitly state whether this guarantee extends to covering 1-800-GOT-JUNK?'s legal fees.
Item 22 references an indemnity agreement within the Kansas addendum that requires the franchisee to indemnify 1-800-GOT-JUNK? against liabilities, obligations, damages, taxes, costs, losses, and actual legal expenses arising from the franchised business operations. However, this section also notes that the franchisee is not required to indemnify 1-800-GOT-JUNK? for claims resulting solely from their breach of the agreement or other wrongs they commit. This indemnity agreement's enforceability in Kansas is contingent upon separate negotiation and reasonableness. This clause highlights the importance of understanding the specific legal and financial obligations outlined in the franchise agreement and any state-specific addenda.
A prospective 1-800-GOT-JUNK? franchisee should seek clarification from the franchisor regarding the scope of the Guarantee Agreement, specifically inquiring whether it encompasses the franchisor's legal fees in the event of a default or breach by the franchisee. Additionally, consulting with a legal professional to review the franchise agreement and any related documents is crucial to fully understand the potential financial obligations and liabilities associated with the franchise.