Does the Checkersrallys indemnification requirement apply to a failure to perform any covenant in the agreement?
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 the 2025 Checkersrallys Franchise Disclosure Document, the franchisee's indemnification obligations do extend to failures to perform any covenant in the agreement. Specifically, the franchisee must indemnify Checkersrallys and its affiliates from losses and expenses arising from third-party claims connected to the franchisee's failure to perform or breach any covenant, agreement, term, or provision within the Franchise Agreement. This means that if a franchisee fails to meet their obligations under the agreement, leading to a third-party claim against Checkersrallys, the franchisee is responsible for covering Checkersrallys's associated losses and expenses.
The indemnification extends to litigation, claims, demands, investigations, or inquiries, regardless of whether they result in a judgment. This obligation applies even if Checkersrallys's negligence caused the loss, liability, or expense, either in whole or in part. However, there are limitations to this indemnification.
The franchisee is not required to indemnify Checkersrallys for liability arising from Checkersrallys's own breach of the agreement or from the gross negligence or willful acts of Checkersrallys. An exception exists for situations involving joint liability, where the franchisee will still be responsible for indemnifying Checkersrallys to the extent of the franchisee's comparative or contributory negligence. This section outlines the circumstances under which a Checkersrallys franchisee is responsible for protecting Checkersrallys from losses and expenses, and it also clarifies the exceptions to this requirement, offering a balanced perspective on risk allocation between the two parties.