Does the Dog Haus franchisee's indemnification obligation apply to liability arising from the gross negligence of the franchisor?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee and its Owners and Affiliates (collectively, the "Indemnitors") shall indemnify, defend and hold harmless to the fullest extent permitted by Applicable Law, Franchisor and its Constituents (collectively, the "Indemnitees"), from any and all "Losses and Expenses" incurred in connection with any litigation or other form of adjudicatory procedure, claim, demand, investigation, or formal or informal inquiry (regardless of whether same is reduced to judgment) or any settlement thereof, and regardless of whether the same is between Indemnitors and Indemnities (collectively, an "Indemnifiable Claim") which arises directly or indirectly from, as a result of, or in connection with Franchisee's operation of the Franchised Restaurant and regardless of whether the Indemnifiable Claim or the Losses and Expenses resulted from any strict or vicarious liability imposed by law on Franchisee; provided, however, that this indemnity shall not apply to any liability arising from the gross negligence of Franchisor (except to the extent that joint liability is involved, in which event the indemnification provided for in this Section 18.4 shall extend to any finding of comparative negligence or contributory negligence attributable to Franchisee).
Source: Item 22 — CONTRACTS (FDD page 87)
What This Means (2025 FDD)
According to Dog Haus's 2025 Franchise Disclosure Document, the franchisee's obligation to indemnify the franchisor does not generally extend to liability resulting from the franchisor's gross negligence. Specifically, the franchisee is required to indemnify and hold harmless the franchisor from losses and expenses related to the franchisee's restaurant operations. However, this indemnification does not apply to liability arising from the gross negligence of Dog Haus, except in cases where joint liability is involved. In such instances, the franchisee's indemnification obligation will extend to cover comparative or contributory negligence attributable to the franchisee.
This provision offers some protection to the franchisee, shielding them from responsibility for the franchisor's own serious errors or omissions. However, the exception for joint liability means that if the franchisee is even partially at fault, they may still be required to indemnify Dog Haus for losses stemming from the franchisor's gross negligence. This could occur, for example, if both the franchisor and franchisee were negligent in a food safety incident.
It is important for prospective Dog Haus franchisees to understand the scope and limitations of this indemnification clause. While it provides some protection against the franchisor's gross negligence, the joint liability exception could still expose the franchisee to significant financial risk. Franchisees should consult with a legal professional to fully assess their potential liabilities under the Franchise Agreement.