Is there any exception to the 1 800 Packouts franchisee's obligation to indemnify the Indemnified Parties?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
Despite Section A., you have no obligation to indemnify or hold harmless an Indemnified Party for, and we will reimburse you for, any Losses (including costs of defending any Proceeding under Section B.) to the extent they are determined in a final, unappealable ruling issued by a court or arbitrator with competent jurisdiction to have been caused solely and directly by the Indemnified Party's willful misconduct or gross negligence, so long as the claim to which those Losses relate is not asserted on the basis of theories of vicarious liability (including agency, apparent agency, or employment) or our failure to compel you to comply with this Agreement. However, nothing in this Section C. limits your obligation to defend us and the other Indemnified Parties under Section B.
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts's 2025 Franchise Disclosure Document, a franchisee is not obligated to indemnify or hold harmless an Indemnified Party under specific conditions. 1 800 Packouts will reimburse the franchisee for any losses, including the costs of defending any legal proceedings, if a court or arbitrator determines in a final, unappealable ruling that the losses were caused solely and directly by the Indemnified Party's willful misconduct or gross negligence.
However, this exception applies only if the claim to which those losses relate is not asserted on the basis of vicarious liability. Vicarious liability includes theories of agency, apparent agency, or employment, or 1 800 Packouts's failure to compel the franchisee to comply with the Franchise Agreement.
Even with this exception, the franchisee's obligation to defend 1 800 Packouts and other Indemnified Parties remains in effect. This means that while 1 800 Packouts may ultimately bear the cost of losses due to their own misconduct or negligence, the franchisee is still initially responsible for providing a defense in any legal proceedings.