Under what circumstances is an Alloy franchisee required to indemnify Alloy and its affiliates?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
You are responsible for any financial losses you incur or remedial actions that you must take as a result of breach of security or unauthorized access to Client Information in your control or possession.
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- Indemnification. Any provision in the franchise agreement or related agreements requiring the franchisee to indemnify, reimburse, defend, or hold harmless the franchisor or other parties is hereby modified such that the franchisee has no obligation to indemnify, reimburse, defend, or hold harmless the franchisor or any other indemnified party for losses or liabilities to the extent that they are caused by the indemnified party's negligence, willful misconduct, strict liability, or fraud.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to the 2025 FDD, the circumstances under which an Alloy franchisee is required to indemnify Alloy and its affiliates depends on the state where the franchise operates. In general, franchisees are responsible for financial losses or remedial actions resulting from security breaches or unauthorized access to client information under their control. However, this is subject to certain state laws.
Specifically, for Alloy franchises in Washington, the standard indemnification clause is modified. Washington franchisees are not obligated to indemnify Alloy or any other indemnified party for losses or liabilities resulting from the indemnified party's negligence, willful misconduct, strict liability, or fraud. This modification provides significant protection to franchisees in Washington, limiting their liability to situations where they are directly at fault and not for Alloy's actions.
Furthermore, all Alloy franchisees must comply with privacy laws regarding client information. Franchisees are responsible for any financial losses they incur or remedial actions that they must take as a result of breach of security or unauthorized access to Client Information in their control or possession.