Does the Alloy franchise agreement specify whether Alloy's negligence needs to be active for a Franchise Claim to trigger indemnification?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchise Claims include, but are not limited to, those arising from any death, personal injury or property damage (whether caused wholly or in part through our or our affiliates' active or passive negligence), latent or other defects in any Facility, or your employment practices.
If a Franchise Claim is made against us or our affiliates, we reserve the right in our sole judgment to select our own legal counsel to represent our interests, at your cost.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, Franchise Claims against Alloy can arise from negligence, whether active or passive. This means that if a claim is made against Alloy or its affiliates due to incidents such as personal injury or property damage, regardless of whether Alloy's negligence was a direct action or a failure to act, the franchisee may be responsible for the associated costs. Alloy retains the right to select its own legal counsel to represent its interests in such claims, and the franchisee will bear the cost of this representation.
This broad definition of Franchise Claims and the franchisee's potential responsibility for legal costs could have significant financial implications. A prospective franchisee should carefully consider the potential for such claims and the associated costs when evaluating the Alloy franchise opportunity. It is important to understand the types of incidents that could lead to claims and to assess the risk management strategies necessary to mitigate potential liabilities.
It is also important to note that the franchisee is responsible for these costs. This could create a financial burden on the franchisee, especially if multiple claims arise or if the claims are substantial. Therefore, a clear understanding of the scope of potential claims and the associated financial responsibilities is crucial for any prospective Alloy franchisee.