Does the Checkersrallys agreement require the franchisee to indemnify the franchisor's assigns?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
10.09 Successors and Assigns. This agreement is binding on the parties hereto and their respective executors, administrators, heirs, assigns and successors in interest. This agreement is fully transferable by us, whether by operation of law or otherwise, and shall inure to the benefit of any transferee or other legal successor to our interest herein.
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 franchise agreement includes provisions related to indemnification. Specifically, franchisees are obligated to indemnify Checkersrallys for third-party claims under Section 5.02 of the agreement. Additionally, the agreement is binding on both parties and their respective successors, assigns, and legal representatives, and it is fully transferable by Checkersrallys. This means that the obligations of the franchisee, including the duty to indemnify, extend to Checkersrallys's successors and assigns.
This requirement means that if Checkersrallys transfers its rights and obligations to another entity, such as in a sale of the company, the franchisee's duty to indemnify Checkersrallys would also extend to this new entity. The franchisee must be prepared to defend and protect Checkersrallys's assigns against certain claims, potentially incurring legal and financial costs. This is a standard practice in franchising, as it ensures that the franchisor's interests are protected even if the business changes hands.
However, the FDD also includes some limitations on damages. While franchisees must indemnify Checkersrallys for third-party claims, both parties waive the right to claim punitive or exemplary damages against each other, except in cases involving the indemnification obligation and confidential information. Franchisees also waive the right to recover consequential, special, and incidental damages. These limitations provide some protection to the franchisee, but the primary obligation to indemnify Checkersrallys and its assigns remains a significant responsibility.
Prospective franchisees should carefully review Section 5.02 of the Checkersrallys franchise agreement to fully understand the scope of their indemnification obligations. It is also advisable to seek legal counsel to assess the potential risks and liabilities associated with this provision. Understanding the circumstances under which indemnification may be required is crucial for making an informed decision about investing in a Checkersrallys franchise.