Is Aplus franchisor obligated for damages arising from the franchisee's operation of the business?
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 responsible for defending, indemnifying, and holding Aplus harmless from any liabilities, damages, or expenses arising from the franchisee's operation of the Aplus store. This includes issues related to the franchisee's ownership, operation, or occupation of the franchised business, any breach of obligations under the franchise agreement, failure to meet Aplus's requirements and system standards, or from the acts or omissions of the franchisee, its employees, or agents. This also extends to the franchisee's advertising of the franchised business.
Aplus is required to provide the franchisee with written notice of any claim for indemnification. However, any failure to provide this notice will only relieve the franchisee of liability if the failure or delay causes actual material prejudice. Aplus retains the right to control all litigation and to defend or settle any claim against them or other indemnified parties in any manner they deem appropriate. Aplus may also hire its own counsel to represent itself or other indemnified parties, and the franchisee is responsible for advancing or reimbursing the costs associated with this counsel.
This section of the FDD highlights that Aplus franchisees bear significant responsibility for any damages or liabilities that arise from their operation of the business. This is a common arrangement in franchising, intended to protect the franchisor from liabilities caused by the independent actions of its franchisees. Prospective franchisees should carefully consider this indemnification clause and understand that they will be responsible for covering legal costs and damages arising from their business operations.