Under what conditions will Aw indemnify a franchisee against damages from a third-party claim arising out of the franchisee's use of a Mark?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.6 Indemnification of Franchisee. We agree to indemnify you against, and to reimburse you for, all damages (but specifically excluding any consequential damages, including, but not limited to, loss of revenue and/or profits) for which you are held liable in any proceeding brought against you by any third party arising out of your use of any Mark, so long as said use is pursuant to and in compliance with this Agreement, and for all costs you reasonably incur in the defense of any such claim in which you are named as a party, so long as you have timely notified us of the claim and have otherwise complied with this Agreement. We have the sole right to defend any such claim.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw agrees to indemnify a franchisee against damages for which the franchisee is held liable in a proceeding brought by a third party arising out of the franchisee's use of any Mark. This protection is contingent upon the franchisee's use of the Mark being pursuant to and in compliance with the Franchise Agreement. Aw will also reimburse the franchisee for all costs reasonably incurred in defending such a claim where the franchisee is named as a party.
However, this indemnification specifically excludes any consequential damages, such as loss of revenue or profits. To be eligible for indemnification, the franchisee must also provide timely notification to Aw of the claim and otherwise comply with all terms of the Franchise Agreement. Aw retains the sole right to defend any such claim.
This type of indemnification is a fairly standard practice in franchising, as it protects franchisees from liabilities arising from the use of the franchisor's trademarks, provided they adhere to the agreed-upon standards and procedures. Franchisees should carefully review the terms of the franchise agreement to fully understand their obligations and the conditions under which they are entitled to indemnification.