Under what circumstances is an Aplus franchisee required to indemnify and reimburse Sunoco for costs and fees related to litigation?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
- (B) You shall further indemnify and reimburse Sunoco for:
- (1) costs, expenses, and fees (including court costs and attorneys' fees) incurred by Sunoco relating to litigation undertaken successfully by Sunoco against you to enforce, terminate, or nonrenew this Lease, or to collect money or recover Equipment and property due from you to Sunoco.
- (2) costs, expenses, fees (including court costs, attorneys' fees, and cost of litigation), taxes, fines, penalties, and judgments incurred or paid by Sunoco by reason of a violation of law by you.
- (E) Notwithstanding any provisions elsewhere set forth above, you shall be liable to Sunoco hereunder, and you do agree to protect, indemnify, and save harmless Sunoco or any other person for claims, losses, and damages, whether caused in part by Sunoco's negligence, but not if caused by Sunoco's sole negligence.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, a franchisee is required to indemnify and reimburse Sunoco under specific circumstances primarily related to the franchisee's actions or failure to comply with the lease agreement. This obligation extends to costs, expenses, and fees, including court costs and attorneys' fees, incurred by Sunoco in litigation against the franchisee to enforce, terminate, or nonrenew the lease, or to recover money, equipment, or property owed to Sunoco. Additionally, franchisees must indemnify Sunoco for costs, expenses, fees, taxes, fines, penalties, and judgments resulting from the franchisee's violation of any law. For a Turnpike location, the franchisee must also defend and indemnify the applicable Turnpike Authority and Concessionaire from claims, liabilities, and litigation.
The franchisee's duty to indemnify Sunoco applies even if Sunoco's negligence contributed to the claim, loss, or damage, unless the damage was caused by Sunoco's sole negligence. This means that even if Sunoco was partially at fault, the franchisee could still be responsible for covering Sunoco's losses. The amounts owed by the franchisee to Sunoco under these indemnities become due and payable upon demand as part of the franchisee's account with Sunoco. Furthermore, any claims the franchisee might have against Sunoco based on the lease are barred unless the franchisee commences an action within twelve months after the event giving rise to the claim.
This indemnification clause is a significant responsibility for Aplus franchisees. It means they could be financially liable for a wide range of costs and legal fees incurred by Sunoco due to the franchisee's actions or non-compliance. The franchisee's obligation to indemnify Sunoco survives the termination of the lease, meaning that even after the franchise relationship ends, the franchisee could still be responsible for these costs. Franchisees should ensure they understand and comply with all applicable laws and the terms of their lease agreement to minimize the risk of triggering these indemnification obligations. Franchisees should also consult with a legal professional to fully understand the scope and implications of these indemnification provisions.