Are assignor and assignee jointly and severally liable to indemnify Big O Tires?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
- Indemnification. ASSIGNOR and ASSIGNEE, jointly and severally, for themselves, their heirs, successors and assigns agree to indemnify and hold BIG O, its past or present directors,
shareholders, predecessors, successors, parents, subsidiaries, agents, officers, employees, representatives, related corporations or entities and any and all persons acting by, through, under or in concert with them, or any of them, harmless from any and all third party claims, liabilities, demands or actions of any kind or nature arising out of or otherwise connected with their ownership and operation of the Big O Tires Store, the actions and transactions contemplated in the Primary Agreement and this Agreement, any other representations and agreements between them and as to the related asset transfers. Nothing contained herein shall be construed as indemnifying and holding BIG O harmless against its own negligent or willful acts.
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, both the assignor and assignee are jointly and severally liable to indemnify Big O Tires. This means that both parties share responsibility for protecting Big O Tires from any third-party claims, liabilities, demands, or actions arising from the ownership and operation of the Big O Tires store, actions and transactions related to the Primary Agreement and the Agreement and Consent to Assignment, and any other representations and agreements between them regarding asset transfers. This indemnification does not cover Big O Tires' own negligent or willful acts.
In practical terms, if a claim arises, Big O Tires can seek full compensation from either the assignor or the assignee, or both, regardless of the specific fault or contribution of each party. This provides Big O Tires with a strong layer of protection during the transfer of ownership. For example, if a customer sues the Big O Tires store for an incident that occurred before the assignment but is discovered after the assignment, Big O Tires can seek indemnification from either the former owner (assignor) or the new owner (assignee).
This requirement is a significant consideration for both assignors and assignees. Assignors need to ensure they have addressed all potential liabilities before the transfer, as they remain responsible even after selling the business. Assignees must conduct thorough due diligence to assess any existing or potential liabilities they may inherit. Both parties may want to secure appropriate insurance coverage and legal advice to manage this risk.
This type of joint and several liability is relatively common in franchise agreements to protect the franchisor's interests during franchise transfers. However, the specific terms and conditions can vary, so prospective Big O Tires franchisees should carefully review the indemnification clause and seek legal counsel to fully understand their obligations and potential liabilities.