Under the Cicis franchise agreement, what is the exception to the franchisee's indemnification obligations related to the Indemnified Party's conduct?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
YOU AGREE TO INDEMNIFY, DEFEND, AND HOLD HARMLESS US, OUR AFFILIATES, AND OUR AND THEIR RESPECTIVE OWNERS, DIRECTORS, MANAGERS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS, AND ASSIGNEES (THE "INDEMNIFIED PARTIES") AGAINST, AND TO REIMBURSE ANY ONE OR MORE OF THE INDEMNIFIED PARTIES FOR, ALL CLAIMS, OBLIGATIONS, AND DAMAGES DIRECTLY OR INDIRECTLY ARISING OUT OF: (I) THE DEVELOPMENT OR OPERATION OF YOUR RESTAURANT, (II) THE BUSINESS YOU CONDUCT UNDER THIS AGREEMENT, (III) YOUR BREACH OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THOSE ALLEGED TO BE CAUSED BY THE INDEMNIFIED PARTY'S NEGLIGENCE, (IV) ANY ACTIVITY THAT OCCURS AT YOUR RESTAURANT LOCATION, AND/OR (V) INSTITUTED BY YOUR EMPLOYEES, OR BY OTHERS THAT ARISE FROM YOUR EMPLOYMENT PRACTICES, UNLESS (AND THEN ONLY TO THE EXTENT THAT) THE CLAIMS, OBLIGATIONS, OR DAMAGES ARE DETERMINED TO BE CAUSED SOLELY BY THE INDEMNIFIED PARTY'S INTENTIONAL MISCONDUCT IN A FINAL, UNAPPEALABLE RULING ISSUED BY A COURT WITH COMPETENT JURISDICTION.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to the 2025 Cicis Franchise Disclosure Document, a franchisee is generally required to indemnify Cicis and its related parties against various claims and damages arising from the operation of the restaurant, the franchisee's business, breaches of the franchise agreement, activities at the restaurant location, and employment practices. This means the franchisee is responsible for covering the costs Cicis incurs due to these issues.
However, there is a specific exception to this indemnification obligation. The franchisee is not required to indemnify Cicis if the claims, obligations, or damages are determined to be caused solely by the Indemnified Party's intentional misconduct. This determination must be made in a final, unappealable ruling by a court with competent jurisdiction.
In practical terms, this means that while a Cicis franchisee bears significant responsibility for liabilities, they are protected from having to cover costs resulting directly from Cicis's own deliberate and wrongful actions, provided this is legally proven in court. This clause offers a degree of protection to the franchisee, ensuring they are not held liable for Cicis's intentional misconduct.