Under what circumstances must an Aw franchisee indemnify the franchisor?
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, franchisees must indemnify, defend, and hold harmless Aw, its shareholders, directors, officers, employees, agents, and assignees under specific circumstances. This means the franchisee is responsible for protecting Aw from certain liabilities and covering their costs.
Specifically, the franchisee is obligated to indemnify Aw against obligations, damages, and taxes for which Aw is held liable, as well as for all costs Aw reasonably incurs in defending against any claim or action in which Aw is named as a party. This indemnification requirement arises out of the franchisee's operation of the Papa Ray's Pizza Restaurant or from the franchisee's breach of the Franchise Agreement. The costs covered 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.
The franchisee also agrees to hold Aw harmless and indemnify and defend Aw for all costs, expenses, or losses Aw incurs in enforcing the provisions of the Franchise Agreement, in 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. Aw retains the right to defend any claim against it.
This indemnification clause means that franchisees bear significant financial responsibility for any legal or financial issues arising from their operation of the Aw franchise or any violation of the franchise agreement. Prospective franchisees should carefully consider these potential liabilities and ensure they have adequate insurance and legal counsel to protect their interests.