Under the Aw franchise agreement, what happens if legal proceedings determine that the franchisee has complied with all terms of the agreement regarding indemnification?
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, if legal proceedings determine that the franchisee has fulfilled and complied with all terms of the franchise agreement, Aw will cover the franchisee's costs, expenses, or losses incurred while enforcing the provisions of the agreement, defending actions related to the agreement, or resulting from a breach of the agreement. This includes reasonable arbitrator and attorney fees, including those for appeals.
This means that Aw franchisees are typically responsible for covering Aw's legal costs if they breach the agreement, or if Aw has to take action to enforce the agreement. However, this shifts if the franchisee is found to be fully compliant with the agreement after legal proceedings. In that case, Aw assumes responsibility for those costs.
This clause provides some protection to franchisees who are wrongly accused of breaching the agreement. It ensures that if a franchisee successfully defends themselves in court and proves their compliance, they will not be burdened with the franchisor's legal expenses. This encourages franchisees to stand up for their rights and defend themselves against unfounded claims without fear of incurring significant financial losses. This is a departure from the typical franchise agreement where franchisees are often responsible for the franchisor's legal fees regardless of the outcome.