Is there a limit to the extent to which a Checkersrallys franchisee must hold the indemnitees harmless?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
You may not make any express or implied agreements, warranties, guarantees or representations or incur any debt in our name or on our behalf or represent that the
relationship of the parties hereto is anything other than that of independent contractors. We will not be obligated by or have any liability under any agreements made by you with any third party or for any representations made by you to any third party. We will not be obligated for any damages to any person or property arising directly or indirectly out of the operation of your business hereunder.
5.02 Indemnification.
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, the franchisee's obligation to indemnify the indemnitees is limited by law. Specifically, the franchisee is obligated to hold the indemnitees harmless to the fullest extent permitted by law. The indemnitees include Checkersrallys, its affiliates, and their respective directors, officers, employees, shareholders, members, agents, successors, and assigns. This indemnification covers losses and expenses related to third-party claims arising from the franchisee's failure to perform the franchise agreement, breach of any representation or warranty, or any unauthorized service or act.
The indemnification applies even if the indemnitees' negligence caused the loss, liability, or expense. However, this indemnity does not extend to liability arising from a breach of the agreement by the indemnitees or the gross negligence or willful acts of the indemnitees, except in cases of joint liability, where the indemnification will cover comparative or contributory negligence attributable to the franchisee.
This means that while Checkersrallys franchisees must provide a broad indemnity, they are not responsible for the franchisor's own breaches, gross negligence, or willful misconduct. Franchisees should be aware of the specific events that trigger the indemnification obligation and the limitations on their responsibility, particularly concerning the franchisor's conduct. This clause is fairly typical in franchising, but the specific carve-outs and limitations are important for franchisees to understand.