Does the Checkersrallys agreement require the franchisee to indemnify the franchisor's members?

According to the 2025 Checkersrallys Franchise Disclosure Document, the franchisee is obligated to indemnify Checkersrallys for third-party claims, as detailed in Section 5.02 of the agreement. However, this obligation is specifically noted as an exception to the general waiver of punitive or exemplary damages between Checkersrallys and the franchisee. This means that while both parties generally waive the right to claim punitive damages from each other, the franchisee remains responsible for covering Checkersrallys's losses resulting from claims made by outside parties.

This indemnification clause requires the franchisee to protect Checkersrallys from financial losses and legal liabilities arising from third-party lawsuits or claims related to the franchisee's operations. This is a fairly standard practice in franchising, as it shields the franchisor from liabilities caused by the franchisee's actions. However, franchisees should carefully review the scope of this indemnification to understand the potential financial exposure.

The FDD also states that Checkersrallys and the franchisee waive any right to claim for any punitive or exemplary damages against the other, except with respect to the obligation to indemnify Checkersrallys for third party claims under Section 5.02, and except with respect to the confidential information in Section 6.01. The franchisee and its owners also waive the right to recover consequential, special, and incidental damages for any claim directly or indirectly arising from or relating to the agreement. This means that Checkersrallys limits the types of damages it can be held liable for in disputes with franchisees, which is a common practice to manage financial risks.

Prospective Checkersrallys franchisees should seek legal counsel to fully understand the implications of the indemnification clause and the limitations on damages. Understanding these provisions is crucial for assessing the potential financial risks and liabilities associated with operating a Checkersrallys franchise.