Does the Checkers franchise agreement require the franchisee to indemnify Checkers for losses and expenses incurred in connection with any litigation?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
5.02 Indemnification.
You agree to indemnify us, our Affiliates and our respective directors, officers, employees, shareholders, members, agents, successors and assigns (collectively "indemnitees"), and to hold the indemnitees harmless to the fullest extent permitted by law, from any and all losses and expenses (as defined below) incurred in connection with any litigation or other form of adjudicatory procedure, claim, demand, investigation, or formal or informal inquiry (regardless of whether it is reduced to judgment) or any settlement thereof which arises directly or indirectly from, or as a result of, a claim of a third party against any one or more of the indemnitees in connection with (i) your failure to perform or breach of any covenant, agreement, term or provision of this Agreement, (ii) your breach of any representation or warranty contained in this Agreement, and (iii) any allegedly unauthorized service or act rendered or performed in connection with this Agreement, (collectively "event") and regardless of whether it resulted from any strict or vicarious liability imposed by law on the indemnitees.
The foregoing indemnity shall apply even if it is determined that the indemnitees' negligence caused such loss, liability or expense, in whole or in part, provided, however, that this indemnity will not apply to any liability arising from a breach of this Agreement by the indemnitees or the gross negligence or willful acts of indemnitees (except to the extent that joint liability is involved, in which event the indemnification provided herein will extend to any finding of comparative or contributory negligence attributable to you).
The term "losses and expenses" includes compensatory, exemplary, and punitive damages; fines and penalties; attorneys' fees; experts' fees; court costs; costs associated with investigating and defending against claims; settlement amounts; judgments; compensation for damages to our reputation and goodwill; and all other costs associated with any of the foregoing losses and expenses.
We agree to give you reasonable notice of any event of which we become aware for which indemnification may be required, and we may elect (but are not obligated) to direct the defense thereof, including appropriate counsel at our sole determination.
We may, in our reasonable discretion, take such actions as we deem necessary and appropriate to investigate, defend, or settle any event or take other remedial or corrective actions with respect thereto as may be necessary for the protection of indemnitees or Restaurants generally, provided however, that any settlement shall be subject to your consent, which consent shall not be unreasonably withheld or delayed.
Further, notwithstanding the foregoing, if the insurer on a policy or policies obtained in compliance with your Franchise Agreements agrees to undertake the defense of an event (an "Insured Event"), we agree not to exercise our right to select counsel to defend the event if such would cause your insurer to deny coverage.
We reserve the right to retain counsel to represent us with respect to an Insured Event at our sole cost and expense.
This Section shall continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, the franchise agreement includes an indemnification clause that requires franchisees to protect Checkers from losses and expenses related to litigation.
Specifically, Checkers franchisees must indemnify Checkers, its affiliates, and their respective directors, officers, employees, shareholders, members, agents, successors, and assigns from any losses and expenses incurred due to litigation, claims, demands, investigations, or inquiries arising from third-party claims. This indemnification covers situations related to the franchisee's failure to perform the agreement, breach of any representation or warranty, or any unauthorized service or act rendered in connection with the agreement. The term "losses and expenses" includes compensatory, exemplary, and punitive damages; fines and penalties; attorneys' fees; experts' fees; court costs; costs associated with investigating and defending against claims; settlement amounts; judgments; compensation for damages to Checkers's reputation and goodwill; and all other costs associated with any of the foregoing losses and expenses.
This indemnification applies even if Checkers's negligence caused the loss, liability, or expense, unless the liability arises from Checkers's breach of the agreement or their gross negligence or willful acts. Checkers agrees to provide reasonable notice of any event that may require indemnification and may elect to direct the defense, including selecting counsel. However, Checkers will not exercise its right to select counsel if it would cause the franchisee's insurer to deny coverage under an insured event, provided the franchisee has obtained the insurance policies required by the Franchise Agreement. Checkers retains the right to have its own counsel present during an Insured Event at its own expense.
This indemnification clause remains in effect even after the termination or expiration of the franchise agreement, meaning that franchisees could still be liable for certain issues even after their franchise relationship with Checkers has ended. Franchisees should consult with a legal professional to fully understand the scope and implications of this indemnification clause.