Does the Checkersrallys agreement require the franchisee to indemnify the franchisor's agents?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
10.10 Limitations on Damages. EXCEPT WITH RESPECT TO YOUR OBLIGATION TO INDEMNIFY US FOR THIRD PARTY CLAIMS UNDER SECTION 5.02, AND EXCEPT WITH RESPECT TO THE CONFIDENTIAL INFORMATION IN SECTION 6.01, FRANCHISOR AND FRANCHISEE (AND ITS OWNERS) EACH WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO OR CLAIM FOR ANY PUNITIVE OR EXEMPLARY DAMAGES AGAINST THE OTHER. YOU AND EACH OF YOUR OWNERS WAIVE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO RECOVER CONSEQUENTIAL, SPECIAL AND INCIDENTAL DAMAGES FOR ANY CLAIM DIRECTLY OR INDIRECTLY ARISING FROM OR RELATING TO THIS AGREEMENT.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to the 2025 Checkersrallys Franchise Disclosure Document, the franchisee's obligation to indemnify Checkersrallys extends to third-party claims as outlined in Section 5.02 of the franchise agreement. Specifically, Section 10.10 states that the waiver of punitive or exemplary damages does not apply to the franchisee's duty to indemnify Checkersrallys for these third-party claims. This means that while Checkersrallys and the franchisee waive rights to punitive damages against each other, the franchisee remains responsible for covering Checkersrallys' losses resulting from claims made by outside parties.
This indemnification clause places a significant financial responsibility on the Checkersrallys franchisee. If a customer or other third party sues Checkersrallys and the claim falls under Section 5.02, the franchisee would be required to cover Checkersrallys' legal costs and any resulting damages. This could include situations such as a customer injury on the franchise premises or a dispute with a supplier caused by the franchisee's actions.
Franchise agreements commonly include indemnification clauses to protect the franchisor from liabilities arising from the franchisee's operations. However, the scope of these clauses can vary significantly. Prospective Checkersrallys franchisees should carefully review Section 5.02 of the franchise agreement to fully understand the types of claims for which they would be required to indemnify Checkersrallys. They should also consider obtaining insurance coverage to mitigate the financial risk associated with this indemnification obligation.