Under what circumstances does the indemnity provided to Protected Parties by Benjamin Franklin Plumbing not apply?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree to indemnify Franchisor, its affiliates, and their respective past, present, and future officers, directors, shareholders, employees, and agents (collectively, "Protected Parties") for, and at our option defend the Protected Parties against: (i) any claims (whether or not by a third party) arising directly or indirectly from, as a result of, or in connection with your activities under this Agreement (collectively, "Claims"); and (ii) any liabilities, damages, losses, and expenses the Protected Parties incur as a result of such Claims, including but not limited to attorneys' fees, costs of investigation, settlement costs, fines, civil penalties, and interest charges (collectively, "Expenses"). To the extent permitted by law, this indemnity includes Claims and Expenses alleged to be caused by the negligence of the Protected Parties, unless (and then only to the extent that) the Claim or Expense is finally determined by a court to have been caused solely by the gross negligence or willful misconduct of the Protected Parties. With respect to any threatened or actual litigation, proceeding, or dispute that could directly or indirectly affect any of the Protected Parties, the Protected Parties will have the right, but no obligation, to: (i) choose counsel; (ii) direct, manage, and control the handling of the matter; and (iii) settle any Claim on behalf of the Protected Parties. Your obligations under this Section are not limited by the amount of your insurance coverage. This Section will survive the expiration or termination of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 88–312)
What This Means (2025 FDD)
According to the 2025 FDD, Benjamin Franklin Plumbing franchisees agree to indemnify the franchisor, its affiliates, and their officers, directors, shareholders, employees, and agents (collectively known as "Protected Parties") against any claims or expenses arising from the franchisee's activities under the Franchise Agreement. This means the franchisee is responsible for covering the legal costs and damages incurred by the franchisor due to the franchisee's actions.
However, this indemnification by the Benjamin Franklin Plumbing franchisee does not apply if a court determines that the claim or expense was caused solely by the gross negligence or willful misconduct of the Protected Parties. In such cases, the franchisee is not responsible for indemnifying the franchisor. The extent of this exception is limited to the degree to which the gross negligence or willful misconduct is the determined cause.
This condition is important for prospective Benjamin Franklin Plumbing franchisees to understand, as it clarifies the limits of their indemnification obligations. While franchisees generally bear responsibility for claims arising from their operations, the franchisor retains liability for its own gross negligence or willful misconduct. Franchisees should consult with legal counsel to fully understand the implications of this indemnification clause and its exceptions.