Under the Aw franchise agreement, is Aw liable for unauthorized agreements made by the franchisee?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as expressly authorized by this Agreement, neither of us will make any express or implied agreements, warranties, guarantees or representations, or incur any debt, in the name of or on behalf of the other or represent that our relationship is other than that of franchisor and franchisee.
- 8.3 Indemnification; Tax Liability.
We will not assume any liability or be deemed liable for any agreements, representations, or warranties you make that are not expressly authorized under this Agreement, nor will we be obligated for any damages to any person or property, directly or indirectly arising out of your operation of your Papa Ray's Pizza Restaurant business, whether or not caused by your negligent or willful action or failure to act.
We will have no liability for any sales, use, excise, income, gross receipts, property, or other taxes levied against you or your assets or on us in connection with the business you conduct, or any payments you make to us pursuant to this Agreement (except for our own income taxes).
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 the 2025 Aw Franchise Disclosure Document, Aw is not liable for unauthorized agreements, representations, or warranties that a franchisee makes, unless expressly authorized by the franchise agreement. Additionally, Aw will not be obligated for damages to any person or property that directly or indirectly arise from the franchisee's operation of the Papa Ray's Pizza Restaurant business. This holds true whether or not the damages were caused by the franchisee's negligence or willful actions.
This means that as an Aw franchisee, you are responsible for your own actions and agreements. Aw will not be held liable for any unauthorized commitments you make. This protects Aw from potential legal issues arising from franchisee misrepresentations or unauthorized deals.
Furthermore, the franchisee is required to indemnify, defend, and hold Aw harmless against any liabilities, damages, and taxes for which Aw is held liable due to the franchisee's operation of the Papa Ray's Pizza Restaurant or any breach of the franchise agreement. This includes covering all costs Aw reasonably incurs in defending against any claims, including attorney's fees and litigation expenses. This clause emphasizes the franchisee's responsibility for their business operations and adherence to the franchise agreement, shifting the burden of liability away from Aw for the franchisee's actions.
This type of clause is standard in franchise agreements. It is important for a prospective Aw franchisee to understand the scope of their own liability and to ensure they operate their business in compliance with the franchise agreement and all applicable laws and regulations.