Under what circumstances does the Card My Yard franchisee's indemnification obligation NOT apply to liability arising from the franchisor's actions?
Card_My_Yard Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree to indemnify, defend and hold harmless us, our Affiliates, and our and their respective shareholders, directors, officers, employees, agents, successors and assignees (the "Indemnified Parties") against, and to reimburse any one or more of the Indemnified Parties for, any and all claims, and liabilities directly or indirectly arising out of the operation of the Card My Yard business or your breach of this Agreement, without limitation and without regard to the cause or causes thereof or the negligence (whether such negligence be sole, joint or concurrent, or active or passive) or strict liability of us or any other party or parties in connection therewith. Notwithstanding the foregoing, this indemnity shall not apply to any liability arising from our gross negligence or willful misconduct, except to the extent that joint liability is involved, in which event the indemnification provided herein shall extend to any finding of comparative or contributory negligence attributable to you, your Owners, officers, directors, employees, independent contractors or Affiliates.
Source: Item 23 — RECEIPTS (FDD pages 84–259)
What This Means (2025 FDD)
According to Card My Yard's 2025 Franchise Disclosure Document, a franchisee is generally obligated to indemnify Card My Yard and its affiliates against claims and liabilities arising from the operation of the Card My Yard business or any breach of the Franchise Agreement. This indemnification extends to liabilities caused by negligence or strict liability, even if Card My Yard is also negligent.
However, the franchisee's indemnification obligation does not apply to liability arising from Card My Yard's gross negligence or willful misconduct. There is an exception to this exception: if joint liability is involved, and the franchisee is found comparatively or contributorily negligent, the franchisee's indemnification obligation extends to cover their share of the negligence.
In practical terms, this means that if Card My Yard is grossly negligent or engages in willful misconduct that leads to a claim, the franchisee is not required to cover Card My Yard's liability unless the franchisee's own negligence also contributed to the claim. This provision aims to protect franchisees from bearing the full financial burden of liabilities primarily caused by the franchisor's serious misconduct, while still holding them accountable for their own actions or negligence that contribute to a loss.