Does a 7 Brew franchisee have an obligation to defend the Indemnified Parties against claims alleging the Indemnified Party's negligence?

According to the 2025 7 Brew Franchise Disclosure Document, a franchisee must indemnify 7 Brew, its affiliates, and their respective owners, directors, officers, employees, agents, successors, and assignees (collectively known as the "Indemnified Parties") against losses resulting from third-party claims related to the store's construction, operation, the franchisee's business conduct, noncompliance with laws, data security incidents, or breach of the franchise agreement. This indemnification extends to defending the Indemnified Parties against claims, including those alleging the Indemnified Party's negligence, gross negligence, willful misconduct, and willful wrongful omissions.

However, the franchisee's obligation to indemnify or hold harmless the Indemnified Parties is limited. The franchisee is not obligated to cover losses if a court or arbitrator determines that the losses were solely and directly caused by the Indemnified Party's negligence, willful misconduct, or willful wrongful omissions. This exception applies only if the claim is not based on vicarious liability (such as agency or joint employment) or 7 Brew's failure to compel the franchisee to comply with the agreement.

In practical terms, this means that a 7 Brew franchisee could be responsible for legal defense costs and other losses incurred by 7 Brew, even if 7 Brew is accused of negligence. However, the franchisee is protected from liability if 7 Brew is ultimately found to be solely responsible for the losses due to their own negligence, misconduct, or omissions, provided the claim does not involve vicarious liability. This type of clause is common in franchise agreements, as it aims to protect the franchisor from liabilities arising from the franchisee's operation of the business while also providing some limitations to the franchisee's responsibilities.