What is the standard for Counselor Realty's negligence that would prevent a Counselor Realty franchisee from having to indemnify them?
Counselor_Realty Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.3 Indemnification. You will defend, indemnify and hold harmless Counselor, its affiliates and their respective officers, agents, and employees from all suits, claims, demands, liabilities and costs, including attorneys' fees, in tort, contract, or otherwise, arising out of or in connection with your operation of the Business except to the extent caused by direct and proximate consequences of our negligence. You waive and release all claims against Counselor, its affiliates, and their respective officers, agents, and employees for damages to property or injuries to persons arising out of or in connection with operation of the Business except to the extent caused by direct and proximate consequences of our negligence.
Source: Item 22 — CONTRACTS (FDD page 32)
What This Means (2025 FDD)
According to Counselor Realty's 2025 Franchise Disclosure Document, a franchisee is not required to indemnify Counselor Realty if the suits, claims, demands, liabilities, and costs arise from the direct and proximate consequences of Counselor Realty's negligence. This means that Counselor Realty franchisees are responsible for defending and covering Counselor Realty's losses in legal matters connected to the franchisee's business operations.
However, this obligation is waived if Counselor Realty's own negligence directly caused the issue. The negligence must be the direct and immediate cause, not a remote or indirect factor. This clause protects franchisees from shouldering the costs of Counselor Realty's own mistakes or misconduct, ensuring they are only liable for issues stemming from their business operations.
This type of indemnification clause is standard in franchise agreements, shifting liability for business operations to the franchisee. The exception for Counselor Realty's negligence is a crucial protection for franchisees. A prospective franchisee should seek legal counsel to fully understand the implications of this clause and the standard of "direct and proximate consequences" under applicable state law.