What triggers the Checkersrallys franchisee's obligation to indemnify?
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, i
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 franchisor and its affiliates arises from specific events related to third-party claims. The franchisee must indemnify Checkersrallys against losses and expenses resulting from litigation, claims, demands, investigations, or inquiries brought by a third party.
This indemnification obligation is triggered by (i) the franchisee's failure to perform or breach of any term in the Franchise Agreement, (ii) the franchisee's breach of any representation or warranty within the agreement, and (iii) any unauthorized service or act performed in connection with the agreement. This means that if a third party sues Checkersrallys due to something the franchisee did or failed to do that violated the agreement, the franchisee is responsible for covering Checkersrallys's associated losses and expenses.
The indemnity extends to Checkersrallys's affiliates, directors, officers, employees, shareholders, members, agents, successors, and assigns. The franchisee is responsible for covering losses and expenses incurred by these parties as well. The obligation to indemnify applies regardless of whether the issue resulted from strict or vicarious liability imposed by law on Checkersrallys.
Notably, the indemnification clause specifies that it applies even if the indemnitees' (Checkersrallys's) negligence caused the loss, liability, or expense. This means that even if Checkersrallys was partially at fault, the franchisee may still be required to indemnify them. Franchisees should be aware of the breadth of this indemnification clause and understand that it could potentially require them to cover significant costs and legal fees in the event of third-party claims arising from their operation of the franchise.