Is an Aplus franchisee required to indemnify Sunoco for claims arising from the contamination or misbranding of products, and are there any exceptions related to Sunoco's actions?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee shall defend, indemnify and hold Franchisor and its affiliates, subsidiaries and parents, and their respective officers, directors, managers, members, partners, shareholders, independent contractors and employees (the "Indemnified Parties") harmless from all fines, suits, proceedings, claims, demands, liabilities, injuries, damages, expenses, obligations or actions of any kind (including costs and reasonable attorneys' fees) arising in whole or in part from Franchisee's ownership, operation, or occupation of the Franchised Business and APLUS Store, performance or breach of its obligations under this Agreement, failure to meet Franchisor requirements and System standards, breach of any warranty or representation in this Agreement or from the acts or omissions of Franchisee, its employees or agents, including its advertising of the Franchised Business, except as otherwise provided in this Agreement. Franchisor and any Indemnified Party shall promptly give Franchisee written notice of any claim for indemnification under this Section 21.3. Any failure to give the notice shall not relieve Franchisee of any liability under this Agreement except to the extent the failure or delay causes actual material prejudice. Franchisor shall have the right to control all litigation, and defend and/or settle any claim against Franchisor or other Indemnified Parties affecting Franchisor's interests, in any manner Franchisor deems appropriate. Franchisor may also retain its own counsel to represent Franchisor or other Indemnified Parties and Franchisee shall advance or
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, the franchisee is generally required to indemnify Sunoco (referred to as Franchisor in this section) and its affiliates from various liabilities. Specifically, the franchisee must defend, indemnify, and hold the Indemnified Parties harmless from all fines, suits, proceedings, claims, demands, liabilities, injuries, damages, expenses, obligations, or actions arising from the franchisee's ownership, operation, or occupation of the Franchised Business and APLUS Store. This also includes liabilities arising from the franchisee's performance or breach of obligations under the agreement, failure to meet Aplus requirements and System standards, breach of any warranty or representation in the agreement, or from the acts or omissions of the franchisee, its employees, or agents, including advertising of the Franchised Business.
However, this indemnification requirement has an exception. The franchisee is not required to indemnify Aplus if otherwise provided in the agreement. Aplus and any Indemnified Party must promptly give the franchisee written notice of any claim for indemnification, and failure to do so may relieve the franchisee of liability to the extent that the failure or delay causes actual material prejudice.
Aplus retains the right to control all litigation and defend or settle any claim against Aplus or other Indemnified Parties affecting Aplus's interests. Aplus may also retain its own counsel to represent Aplus or other Indemnified Parties, and the franchisee is required to advance or reimburse Aplus for all costs and reasonable attorneys' fees incurred in connection with the claim. This means that while the franchisee is responsible for the costs, Aplus maintains control over the legal proceedings. This indemnification clause is a standard practice in franchising, designed to protect the franchisor from liabilities arising from the franchisee's operations, but it's crucial for a prospective franchisee to understand the scope and limitations of this obligation.