Does the Checkersrallys agreement require the franchisee to indemnify the franchisor's employees?
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 Checkersrallys's 2025 Franchise Disclosure Document, the franchisee is obligated to indemnify Checkersrallys for third-party claims under Section 5.02 of the agreement. Specifically, Section 10.10 states that this indemnification obligation is an exception to the general waiver of damages between Checkersrallys and the franchisee. This means that if a third party sues Checkersrallys and the claim falls under Section 5.02, the franchisee will be responsible for covering Checkersrallys's losses.
This requirement has significant implications for a prospective Checkersrallys franchisee. It means the franchisee could be financially responsible for legal claims made against Checkersrallys, depending on the specifics outlined in Section 5.02, which is not provided in the excerpt. The franchisee's financial exposure would depend on the nature and extent of the third-party claim.
In the franchise industry, indemnification clauses are relatively common, but their scope can vary widely. Franchisees should carefully review the specific circumstances under which they are required to indemnify the franchisor. It is important for a prospective Checkersrallys franchisee to understand the full scope of Section 5.02 to assess the potential risks and liabilities associated with this indemnification clause.
To fully understand the obligations, a prospective franchisee should request and carefully review Section 5.02 of the Checkersrallys franchise agreement to determine the specific types of third-party claims that would trigger the franchisee's duty to indemnify Checkersrallys.