Under what circumstances does the Aplus franchisee's indemnification of the Indemnitees NOT apply?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
7.3. Indemnification. You shall indemnify and hold harmless to the fullest extent by law, Franchisor, its Affiliate and their respective directors, officers, managers, employees, shareholders, and agents, (collectively, "Indemnitees") from any and all "losses and expenses" (as hereinafter defined) incurred in connection with any litigation or other form of adjudicatory procedure, claim, demand, investigation, or formal or informal inquiry (regardless of whether same is reduced to judgment) or any settlement thereof arising out of or related to the business contemplated under this Agreement ("event"), and regardless of whether same resulted from any strict or vicarious liability imposed by law on the Indemnitees; provided, however, that this indemnity shall not apply to any liability arising from the gross negligence of Indemnitees (except to the extent that joint liability is involved, in which event the indemnification provided in this Agreement shall extend to any finding of comparative negligence or contributory negligence attributable to you). For the purpose of this Section 7.3, the term "losses and expenses" include compensatory, exemplary, or punitive damages; fines and penalties; attorneys' fees; experts' fees; court costs; costs associated with investigating and defending against claims; settlement amounts; judgments; compensation for damages to Franchisor's reputation and goodwill; and all other costs associated with any of the foregoing losses and expenses. You shall give Franchisor prompt notice of any event of which you are aware, for which indemnification is required, and, at your expense and risk, Franchisor may elect to assume (but under no circumstance is obligated to undertake) the defense and/or settlement thereof, provided that Franchisor will seek your advice and counsel. Any assumption by Franchisor shall not modify your indemnification obligation. Franchisor may, in its sole and absolute discretion, take such actions as it seems necessary and appropriate to investigate, defend, or settle any event or take other remedial or corrective actions with respect thereof as may be, in Franchisor's sole and absolute discretion, necessary for the protection of the indemnities or the System.
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, the franchisee is generally required to indemnify the Indemnitees (which include Aplus, its affiliates, and their respective directors, officers, managers, employees, shareholders, and agents) from losses and expenses related to the Aplus business. This indemnification covers a broad range of potential liabilities, including damages, fines, attorney's fees, and settlement amounts.
However, the Aplus franchise agreement stipulates a specific exception to this indemnification requirement. The franchisee is not required to indemnify the Indemnitees for liability arising from the gross negligence of the Indemnitees.
It's important to note that even in cases of joint liability where the franchisee is also comparatively or contributorily negligent, the indemnification obligation still extends to the franchisee's portion of the negligence. This means the franchisee remains responsible for indemnifying Aplus for any negligence attributed to the franchisee, even if Aplus was also negligent to some degree.