Under what condition is the franchisee not required to indemnify Aw for costs incurred in enforcing the Aw franchise agreement?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
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, a franchisee is typically required to indemnify Aw for costs, expenses, or losses incurred while enforcing the franchise agreement. This includes covering reasonable arbitrator and attorney fees, even those for appeals, if the franchisee breaches the agreement. This means that if Aw has to take legal action to ensure the franchisee complies with the agreement, the franchisee is generally responsible for covering Aw's associated costs.
However, the FDD specifies a condition under which the franchisee is not required to indemnify Aw. If legal proceedings are completed and the franchisee is found to have fulfilled and complied with all the terms of the franchise agreement, then the franchisee is not responsible for covering Aw's costs. In other words, if the franchisee wins the legal dispute by proving they were in full compliance, they are not obligated to pay Aw's legal fees.
This provision offers some protection to franchisees, ensuring they aren't automatically liable for Aw's legal costs even if a dispute arises. It creates an incentive for Aw to ensure their claims against a franchisee are well-founded before pursuing legal action. A prospective franchisee should carefully consider this clause, as it outlines the circumstances under which they could be responsible for significant legal expenses, and conversely, when they are protected from such expenses.