Does the Checkersrallys agreement require the franchisee to indemnify the franchisor's officers?
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.
You agree that, for our System to function properly, we should not be burdened with the costs of litigating system-wide disputes. Accordingly, any disagreement between you (and your Owners) and us shall be considered unique as to its facts and shall not be brought as a class action, and you (and each of your Owners) waive any right to proceed against us or any of our shareholders, members, Affiliates, officers, directors, employees, agents, successors and assigns by way of class action, or by way of a multi-plaintiff, consolidated or collective action. In any legal action between the parties, the court shall not be precluded from making its own independent determination of the issues in question, notwithstanding the similarity of issues in any other legal action involving us and any other franchisee, and each party waives the right to claim that a prior disposition of the same or similar issues precludes such independent determination.
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the franchise agreement includes a section regarding limitations on damages. Specifically, it states that the franchisee's obligation to indemnify Checkersrallys for third-party claims under Section 5.02 is an exception to the waiver of punitive or exemplary damages. This means that while franchisees and Checkersrallys generally waive the right to claim punitive or exemplary damages against each other, the franchisee remains obligated to indemnify Checkersrallys for third-party claims as outlined in Section 5.02.
This obligation extends beyond just Checkersrallys as a corporate entity. The clause explicitly includes Checkersrallys's shareholders, members, affiliates, officers, directors, employees, agents, successors, and assigns. Therefore, the franchisee's indemnification responsibility covers a broad range of individuals and entities associated with Checkersrallys. This means that if a third party brings a claim against any of these individuals or entities related to the franchisee's operations, the franchisee may be required to cover the costs and damages resulting from that claim.
For a prospective Checkersrallys franchisee, this indemnification clause is a significant consideration. It means they could be financially responsible for legal claims made against Checkersrallys and its associated parties due to the franchisee's actions or inactions. It is important for potential franchisees to carefully review Section 5.02 of the franchise agreement to fully understand the scope of these indemnification obligations and to assess the potential financial risks involved. Franchisees should also consider obtaining adequate insurance coverage to protect themselves against such claims.