Does the 7 Brew franchise agreement require franchisees to indemnify for claims arising from allegations that 7 Brew is a joint employer responsible for the franchisee's employees?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
E. Indemnification
To the fullest extent permitted by Law, you must indemnify and hold harmless us, our affiliates, and our and their respective owners, directors, officers, employees, agents, successors, and assignees (the "Indemnified Parties") against, and reimburse any one or more of the Indemnified Parties for, all Losses (defined below) incurred as a result of:
- (1) a claim threatened or asserted;
- (2) an inquiry made formally or informally; or
- (3) a legal action, investigation, or other proceeding brought
by a third party and directly or indirectly arising out of:
- (i) the Store's construction, design, or operation;
- (ii) the business you conduct under this Agreement;
- (iii) your noncompliance or alleged noncompliance with any Law, including any allegation that we or another Indemnified Party is a joint employer or otherwise responsible for your acts or omissions relating to the Store's employees;
- (iv) a Data Security Incident; or
- (v) your breach of this Agreement.
You also agree to defend the Indemnified Parties (unless an Indemnified Party chooses to defend at your expense as provided in the following paragraph) against any and all such claims, inquiries, actions, investigations, and proceedings, including those alleging the Indemnified Party's negligence, gross negligence, willful misconduct, and willful wrongful omissions. However, you have no obligation to indemnify or hold harmless an Indemnified Party for any Losses 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 negligence, willful misconduct, or willful wrongful omissions, 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 joint employment) or our failure to compel you to comply with this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to the 2025 FDD, the 7 Brew franchise agreement includes an indemnification clause that may require franchisees to indemnify 7 Brew and its affiliates against losses arising from claims that 7 Brew is a joint employer of the franchisee's employees. Specifically, franchisees must indemnify 7 Brew for losses resulting from claims, inquiries, or legal actions by a third party that directly or indirectly arise out of the store's construction, operation, the business conducted under the agreement, noncompliance with laws, data security incidents, or breach of the agreement.
This indemnification extends to allegations that 7 Brew or another indemnified party is a joint employer or is otherwise responsible for the franchisee's actions or omissions related to the store's employees. The franchisee also agrees to defend the indemnified parties against such claims, including those alleging negligence, gross negligence, willful misconduct, and willful wrongful omissions.
However, the franchisee is not obligated to indemnify 7 Brew for losses caused solely and directly by 7 Brew's negligence, willful misconduct, or willful wrongful omissions, provided the claim is not based on vicarious liability (such as agency, apparent agency, or joint employment) or 7 Brew's failure to compel the franchisee to comply with the agreement. This means that if a claim arises due to the franchisee's actions related to their employees, and there's an allegation that 7 Brew is a joint employer, the franchisee may have to cover 7 Brew's losses, legal fees, and other expenses, unless it's proven that 7 Brew was directly and solely responsible for the issue, and not on the basis of a joint employer theory.