Under what circumstances is the Developer NOT required to indemnify Chicken Guy?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
Developer and all guarantors of Developer's obligations under this Agreement shall, at all times, indemnify, defend (with counsel reasonably acceptable to Chicken Guy), and hold harmless (to the fullest extent permitted by law) Chicken Guy and its affiliates, and their respective successors, assigns, past and present stockholders, directors, officers, employees, agents and representatives (collectively "Indemnitees") from and against all "losses and expenses" (as defined below) incurred in connection with any action, suit, proceeding, claim, demand, investigation, inquiry (formal or informal), judgment or appeal thereof by or against Indemnitees or any settlement thereof (whether or not a formal proceeding or action had been instituted), arising out of or resulting from or connected with Developer's (or its employees') development of the Franchised Restaurants and Developer's (or its employees') activities under this Agreement, excluding the gross negligence or willful misconduct of any Indemnitee.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, the developer is generally required to indemnify Chicken Guy and its affiliates against losses and expenses arising from the developer's activities related to the franchised restaurants. However, this indemnification requirement does not apply in cases involving the gross negligence or willful misconduct of any Indemnitee (Chicken Guy and its affiliates).
This means that if Chicken Guy or its affiliates are directly responsible for losses or expenses due to their own gross negligence or intentional misconduct, the developer is not obligated to cover those costs. This provision protects the developer from liability for actions or omissions directly attributable to Chicken Guy.
For a prospective Chicken Guy franchisee, this is an important protection. It ensures they are not held responsible for damages or losses caused by the franchisor's own negligent or intentional acts. However, the franchisee should carefully review the definition of "gross negligence or willful misconduct" in the franchise agreement to fully understand the scope of this exception. It is also important to note that the developer is still responsible for their own actions and the actions of their employees.