Under what circumstances related to liability does the exception to the Embassy Suites franchisee's indemnity obligation not apply?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
You do not have to indemnify an Indemnified Party to the extent damages otherwise covered under this Section 14 are adjudged by a final, non-appealable judgment of a court of competent jurisdiction to have been solely the result of the gross negligence or willful misconduct of that Indemnified Party, and not any of the acts, errors, omissions, negligence or misconduct of you or anyone related to you or the Hotel.
You may not rely on this exception to your indemnity obligation if the claims were asserted against us or any other Indemnified Party on the basis of theories of imputed or secondary liability, such as vicarious liability, agency, or apparent agency, or our failure to compel you to comply with the provisions of this Agreement, including compliance with Standards, Laws or other requirements.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, a franchisee's obligation to indemnify an Indemnified Party does not apply if a court determines that damages were solely the result of the Indemnified Party's gross negligence or willful misconduct. This exception is contingent on the franchisee, or anyone related to them or the hotel, not contributing to the acts, errors, omissions, negligence, or misconduct.
However, this exception to the indemnity obligation is nullified if claims are made against Embassy Suites or any Indemnified Party based on theories of imputed or secondary liability. This includes situations involving vicarious liability, agency, or apparent agency. It also applies if the claim arises from Embassy Suites's failure to compel the franchisee to comply with the franchise agreement's provisions, including adherence to standards, laws, or other requirements.
In practical terms, this means that while an Embassy Suites franchisee might be shielded from indemnity obligations if the franchisor is directly and solely responsible for damages due to gross negligence or willful misconduct, this protection disappears if the franchisee's actions or omissions played any role in the damages. Furthermore, the franchisee cannot rely on this exception if the claims against Embassy Suites are based on legal theories that hold the franchisor responsible for the franchisee's actions or failures to comply with the agreement.