Is the Checkersrallys franchisee required to indemnify for claims arising directly from a third party claim?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree to indemnify us, our Affiliates and our respective directors, officers, employees, shareholders, members, agents, successors and assigns (collectively "indemnitees"), and to hold the indemnitees harmless to the fullest extent permitted by law, from any and all losses and expenses (as defined below) incurred in connection with any litigation or other form of adjudicatory procedure, claim, demand, investigation, or formal or informal inquiry (regardless of whether it is reduced to judgment) or any settlement thereof which arises directly or indirectly from, or as a result of, a claim of a third party against any one or more of the indemnitees in connection with (i) your failure to perform or breach of any covenant, agreement, term or provision of this Agreement, (ii) your breach of any representation or warranty contained in this Agreement, and (iii) any allegedly unauthorized service or act rendered or performed in connection with this Agreement, (collectively "event") and regardless of whether it resulted from any strict or vicarious liability imposed by law on the indemnitees.
The foregoing indemnity shall apply even if it is determined that the indemnitees' negligence caused such loss, liability or expense, in whole or in part, provided, however, that this indemnity will not apply to any liability arising from a breach of this Agreement by the indemnitees or the gross negligence or willful acts of indemnitees (except to the extent that joint liability is involved, in which event the indemnification provided herein will extend to any finding of comparative or contributory negligence attributable to you).
Source: Item 23 — RECEIPTS (FDD pages 92–384)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, franchisees are required to indemnify Checkersrallys for losses and expenses incurred from third-party claims. Specifically, this obligation arises from claims against Checkersrallys connected to the franchisee's failure to perform the franchise agreement, breach of any representation or warranty within the agreement, or any unauthorized service or act performed under the agreement. This indemnification extends to Checkersrallys's affiliates, directors, officers, employees, shareholders, members, agents, successors, and assigns.
The franchisee's duty to indemnify Checkersrallys applies even if the indemnitees' negligence contributed to the loss, liability, or expense. However, there's an exception: the franchisee is not responsible for liabilities arising from Checkersrallys's breach of the agreement or their gross negligence or willful acts. If joint liability is involved, the franchisee's indemnification extends to any comparative or contributory negligence attributed to them.
This indemnification clause means that a Checkersrallys franchisee could be financially responsible for legal claims and associated costs if a third party sues Checkersrallys due to the franchisee's actions or failures related to the franchise agreement. It is important to note the exceptions to this requirement, such as liabilities arising from Checkersrallys's own actions. Franchisees should seek legal counsel to fully understand the scope and implications of this indemnification clause, especially regarding potential liabilities and the circumstances under which they may be responsible for covering Checkersrallys's losses.