Is there an exception to the Beggars Pizza franchisee's indemnification obligation if the claims are caused by the franchisor's negligence?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee must indemnify and hold harmless Franchisor and its affiliates, and their respective officers, directors and employees against any claims, losses, costs, expenses, liabilities, and damages arising directly or indirectly from, as a result of, or in connection with Franchisee's operation of the Restaurant, the business conducted under the Agreement, Franchisee's failure to comply with applicable regional, national, international, and local laws and regulations as described herein, or Franchisee's breach of the Agreement including, without limitation, those alleged to be caused by Franchisor's negligence unless (and then only to the extent
that) the claims, obligations, and damages are determined to be caused solely by Franchisor's gross negligence or willful misconduct according to a final, unappealable ruling issued by a court with competent jurisdiction and the costs including, without limitation, reasonable attorneys' fees of defending against them.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, a franchisee must indemnify and hold harmless Beggars Pizza and its affiliates, as well as their respective officers, directors, and employees, from any claims, losses, costs, expenses, liabilities, and damages. This indemnification extends to issues arising directly or indirectly from the franchisee's operation of the restaurant, the business conducted under the Franchise Agreement, the franchisee's failure to comply with applicable laws and regulations, or the franchisee's breach of the Franchise Agreement.
However, there is an exception to this indemnification obligation. The franchisee is not required to indemnify Beggars Pizza for claims, obligations, and damages that are determined to be caused solely by Beggars Pizza's gross negligence or willful misconduct. This determination must be made by a final, unappealable ruling issued by a court with competent jurisdiction. This exception also applies to the costs, including reasonable attorneys' fees, of defending against such claims.
This means that while a Beggars Pizza franchisee generally bears the responsibility for losses and liabilities associated with the restaurant's operation, they are protected from having to cover damages that are definitively the result of Beggars Pizza's own gross negligence or willful misconduct. However, the franchisee may bear the costs of defending against claims of Beggars Pizza's negligence until a court ruling determines that Beggars Pizza is solely responsible for the damages.