What specific failures or breaches by the Checkers franchisee trigger the indemnification obligation?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
You may not make any express or implied agreements, warranties, guarantees or representations or incur any debt in our name or on our behalf or represent that the
relationship of the parties hereto is anything other than that of independent contractors. We will not be obligated by or have any liability under any agreements made by you with any third party or for any representations made by you to any third party. We will not be obligated for any damages to any person or property arising directly or indirectly out of the operation of your business hereunder.
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).
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, franchisees are obligated to indemnify Checkers and its affiliates under certain conditions. Specifically, this obligation arises from third-party claims against Checkers that are directly or indirectly related to the franchisee's actions. These triggering events include the franchisee's failure to perform or breach any covenant, agreement, term, or provision within the Franchise Agreement. Additionally, a breach of any representation or warranty made within the agreement, or any allegedly unauthorized service or act rendered or performed in connection with the agreement, can also trigger this indemnification requirement. This means that if a customer or other third party sues Checkers due to something the franchisee did or failed to do, the franchisee may have to cover Checkers's losses and expenses.
The indemnification extends to losses and expenses incurred in connection with any litigation, claim, demand, investigation, or inquiry, regardless of whether it results in a judgment. This broad coverage means that even informal inquiries or investigations can trigger the franchisee's obligation to indemnify Checkers. The indemnity applies even if Checkers's negligence caused the loss, liability, or expense, either in whole or in part. However, there is an exception: the franchisee is not responsible for liability arising from a breach of the Franchise Agreement by Checkers, or from the gross negligence or willful acts of Checkers, unless joint liability is involved, in which case the franchisee will be responsible for their share of negligence.
This indemnification clause is a significant point for prospective Checkers franchisees. It means they could be responsible for covering Checkers's legal costs and other expenses if a third party makes a claim against Checkers related to the franchisee's operations. Franchisees should carefully review the Franchise Agreement to understand their obligations and potential liabilities. They should also consider obtaining appropriate insurance coverage to protect themselves against such claims. It is also important to note that the franchisee is acting as an independent contractor and may not make any agreements, warranties, or representations on behalf of Checkers.