Is the Checkersrallys franchisee required to indemnify for claims arising indirectly 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 and its affiliates. Specifically, the franchisee must hold the indemnitees harmless from losses and expenses connected to litigation, claims, demands, investigations, or inquiries that arise directly or indirectly from a third-party claim against Checkersrallys. This includes claims resulting from the franchisee's failure to perform the franchise agreement, breach of any representation or warranty within the agreement, or any unauthorized service or act.
This indemnification extends to situations where the indemnitees' negligence caused the loss, liability, or expense, either in whole or in part. However, the franchisee is not responsible for liability arising from Checkersrallys's breach of the agreement or the gross negligence or willful acts of Checkersrallys, except in cases involving joint liability where the franchisee will indemnify Checkersrallys for comparative or contributory negligence attributable to the franchisee.
This means that as a Checkersrallys franchisee, you could be financially responsible for legal costs and damages incurred by Checkersrallys due to third-party claims linked to your actions or failures, even if Checkersrallys was partly at fault. It is important to understand the scope of this indemnification and potentially seek legal counsel to assess the risks involved. Franchisees should ensure they maintain adequate insurance coverage to protect against potential claims and liabilities.