What does the Aw franchise agreement state regarding the franchisee's obligation to indemnify Aw?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree to indemnify, defend and hold us, our shareholders, directors, officers, employees, agents and assignees, harmless against and to reimburse us for all such obligations, damages, and taxes for which we are held liable and for all costs we reasonably incur in the defense of any such claim brought against us or in any such action in which we are named as a party, arising out of your operation of the Papa Ray's Pizza Restaurant, and/or arising out of your breach of this Agreement, including without limitation actual and consequential damages, reasonable attorneys', accountants', and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and travel and living expenses.
We have the right to defend any such claim against us.
You further agree to hold us harmless and indemnify and defend us for all cost, expense or loss we incur in enforcing the provisions of this Agreement, in defending our actions taken relating to this Agreement, or resulting from your breach of this Agreement, including, without limitation, reasonable arbitrators' and attorneys' fees (including those for appeal), unless, after legal proceedings are completed, you are found to have fulfilled and complied with all the terms of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the franchise agreement stipulates that franchisees must indemnify, defend, and hold harmless Aw, including its shareholders, directors, officers, employees, agents, and assignees. This means the franchisee is responsible for protecting Aw from any liabilities, damages, and taxes for which Aw is held liable, as well as covering all costs Aw reasonably incurs in defending against any claims or actions arising from the franchisee's operation of the Papa Ray's Pizza Restaurant or any breach of the Franchise Agreement. These costs include actual and consequential damages, reasonable attorneys', accountants', and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses, and travel and living expenses. Aw retains the right to defend any such claim brought against it.
Furthermore, the franchisee is obligated to hold Aw harmless and indemnify and defend Aw for all costs, expenses, or losses Aw incurs while enforcing the provisions of the Franchise Agreement, defending actions taken relating to the agreement, or resulting from the franchisee's breach of the agreement. This includes reasonable arbitrators' and attorneys' fees, including those for appeal, unless legal proceedings determine that the franchisee has fulfilled and complied with all terms of the agreement.
This indemnification clause places a significant financial responsibility on the franchisee. If a customer sues Aw due to an incident at the franchisee's location, the franchisee would likely be responsible for covering Aw's legal defense costs and any resulting settlement or judgment. Similarly, if the franchisee violates the franchise agreement, leading to legal action by Aw, the franchisee could be required to pay Aw's legal fees. Prospective franchisees should carefully consider this obligation and consult with legal counsel to fully understand the scope of their potential liability.