Is Clean Your Dirty Face liable for damages arising from the operation of a franchisee's Clean Your Dirty Face business?
Clean_Your_Dirty_Face Franchise · 2025 FDDAnswer from 2025 FDD Document
16.B. NO LIABILITY FOR ACTS OF OTHER PARTY.
We and you may not make any express or implied agreements, warranties, guarantees, or representations, or incur any debt, in the name or on behalf of the other or represent that our respective relationship is other than franchisor and franchise owner. We will not be obligated for any damages to any person or property directly or indirectly arising out of your Business's operation or the business you conduct under this Agreement.
16.C. TAXES.
We will have no liability for any sales, use, service, occupation, excise, gross revenue, income, property, or other taxes, whether levied on you or your Business, due to the business you conduct (except for our income taxes). You are responsible for paying these taxes and must reimburse us for any taxes that we must pay to any state taxing authority on account of either your operation or payments that you make to us.
16.D. INDEMNIFICATION.
You agree to indemnify, defend, and hold harmless us, our affiliates, and our and their respective shareholders, directors, 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) your Business's operation; (ii) the business you conduct under this Agreement; (iii) your breach of this Agreement, including those alleged to be or found to have been caused by the Indemnified Party's gross negligence or willful misconduct, unless (and then only to the extent that) the claims, obligations, or damages are determined to be caused solely by our gross negligence or willful misconduct in a final, unappealable ruling issued by a court or arbitrator with competent jurisdiction; and/or (iv) your employment practices, whether instituted by your employees or by others.
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 FDD, Clean Your Dirty Face is not liable for damages that arise from a franchisee's business operations. The franchise agreement stipulates that Clean Your Dirty Face and the franchisee are separate entities, and neither can incur debts or make representations on behalf of the other. This means franchisees operate independently and are responsible for their own business conduct.
This separation of liability is a common arrangement in franchising. It protects Clean Your Dirty Face from legal and financial claims resulting from a franchisee's actions. However, franchisees must understand they are responsible for all aspects of their business's operation, including any damages or liabilities incurred. Franchisees also must indemnify Clean Your Dirty Face and its affiliates against claims arising from the franchisee's business operation, breach of the franchise agreement, or employment practices, even if the claims allege gross negligence or willful misconduct by Clean Your Dirty Face, unless a court rules the damages were caused solely by Clean Your Dirty Face's gross negligence or willful misconduct.
Furthermore, the franchisee is responsible for all taxes related to their business, except for Clean Your Dirty Face's income taxes. The franchisee must also reimburse Clean Your Dirty Face for any taxes Clean Your Dirty Face pays on behalf of the franchisee's operation or payments made to Clean Your Dirty Face. This reinforces the franchisee's financial independence and responsibility for their business's financial obligations.