What is the 1-800-GOT-JUNK? Guarantor's liability for any loss incurred by the Franchisor due to the Franchisee's actions?
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, the Guarantor's liability for any loss incurred by 1-800-GOT-JUNK? due to the Franchisee's actions is detailed within the agreements outlined in Item 22. Specifically, Section 22 of the Franchise Agreement states that the franchisee will indemnify and hold harmless 1-800-GOT-JUNK?, including its subsidiaries, affiliates, shareholders, directors, officers, employees, agents, assignees, and other franchisees, against all liabilities, obligations, consequential damages, taxes, costs, losses, and actual legal expenses arising from the operation of the franchised business. However, 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 broad indemnification clause means that a guarantor could be held financially responsible for a wide range of issues stemming from the franchisee's operation of the 1-800-GOT-JUNK? business. This includes not only direct financial losses but also consequential damages and legal expenses. The FDD stipulates that this provision may not be enforceable in Kansas unless separately negotiated and deemed reasonable, highlighting the importance of franchisees understanding their obligations and potential liabilities under the agreement.
Prospective franchisees should carefully review the Franchise Agreement and Guarantee Agreement, paying close attention to the scope of the indemnification and guarantee provisions. It is advisable to seek legal counsel to fully understand the implications of these clauses and to assess the potential financial risks associated with guaranteeing the franchisee's obligations to 1-800-GOT-JUNK?.