Does the Checkersrallys agreement require the franchisee to indemnify the franchisor's successors?
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 Checkersrallys's 2025 Franchise Disclosure Document, the franchise agreement requires the franchisee to indemnify Checkersrallys for third-party claims, and this obligation extends to Checkersrallys's successors. Specifically, the franchisee is obligated to indemnify Checkersrallys for third-party claims as outlined in Section 5.02 of the agreement. This requirement is not waived, even if Checkersrallys transfers the agreement to a successor.
This means that if a third party brings a claim against Checkersrallys (or its successors) related to the franchisee's operations, the franchisee will be responsible for covering Checkersrallys's losses, including legal fees and any damages awarded. This indemnification obligation is a significant responsibility for the franchisee, as it could potentially involve substantial costs depending on the nature and extent of the third-party claim.
It is important for a prospective Checkersrallys franchisee to carefully review Section 5.02 of the franchise agreement to fully understand the scope of their indemnification obligations. Franchisees should also consider obtaining appropriate insurance coverage to protect themselves against potential third-party claims. Understanding the full extent of this obligation is crucial for assessing the financial risks associated with investing in a Checkersrallys franchise.