Under what circumstances is a Chesters franchisee NOT obligated to indemnify the franchisor?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
Any provision in the franchise agreement or related agreements requiring the franchisee to indemnify, reimburse, defend, or hold harmless the franchisor or other parties is hereby modified such that the franchisee has no obligation to indemnify, reimburse, defend, or hold harmless the franchisor or any other indemnified party for losses or liabilities to the extent that they are caused by the indemnified party's negligence, willful misconduct, strict liability, or fraud.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, a franchisee's obligation to indemnify, reimburse, defend, or hold harmless the franchisor or other indemnified parties is limited. Specifically, the franchisee is not obligated to cover losses or liabilities that arise from the indemnified party's actions.
This means that Chesters franchisees are protected from having to pay for the franchisor's mistakes or intentional misconduct. The franchisee's protection extends to situations where the franchisor's negligence, willful misconduct, strict liability, or fraud causes the losses or liabilities. This modification to the standard indemnification clause is favorable for franchisees, as it prevents them from being financially responsible for issues caused by the franchisor.
This type of clause is designed to protect franchisees from undue financial burden due to the franchisor's actions. Prospective franchisees should carefully review the indemnification clause in the franchise agreement to fully understand their obligations and protections. It is also advisable to seek legal counsel to ensure a complete understanding of the agreement's terms and implications.