What costs are included in the Exit franchisee's indemnification obligations to the Subfranchisor?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
ot constitute either party an agent, legal representative, joint venture, partner, employee, or servant of the other party for any purpose whatsoever. Franchisee shall be an independent contractor and is no way authorized and shall not make any contract, agreement, warranty, or representation on behalf of Subfranchisor or create any obligation, express or implied, on behalf of Subfranchisor.
- (B) Under no circumstances shall either party be liable for any act, omission, contract, debt, or other obligation of the other party. Franchisee shall indemnify defend (with legal counsel reasonably acceptable to the indemnitee) and hold Subfranchisor, EXIT and their Affiliates, officers, directors, employees, and officials harmless against any such claim and the cost (including reasonable attorneys' fees) of responding to, defending, settling or paying each such claim arising, directly or indirectly, from, as a result of, or in connection with Franchisee's operation of the Franchisee's business during and after the term of this Agreement. This indemnification shall specifically include claims from franchisees relating to all services which Franchisee has agreed or subsequently agrees or undertakes to perform on Subfranchisor's behalf. Subfranchisor shall indemnify and save Franchisee harmless against any claim arising, directly or indirectly, from or as a result of Subfranchisor's acts, omissions, contracts, debts, or obligations, and against the cost of defending against any such claim. Franchisees have no obligation to indemnify or hold harmless an indemnified party for losses to the extent that they are determined to have
been caused solely and directly by the indemnified party's gross negligence or recklessness, willful misconduct, strict liability, or fraud.
**32. REASONABLE CONSENT;
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the franchisee is obligated to indemnify, defend, and hold the subfranchisor, Exit, their affiliates, officers, directors, employees, and officials harmless against any claim. This includes covering the costs, including reasonable attorneys' fees, associated with responding to, defending, settling, or paying each claim. These claims must arise directly or indirectly from, as a result of, or in connection with the franchisee's operation of the Exit business, both during and after the term of the agreement. This indemnification extends specifically to claims from franchisees relating to all services which the franchisee has agreed or subsequently agrees or undertakes to perform on the subfranchisor's behalf.
This means that if a third party, such as a customer or another franchisee, brings a claim against the subfranchisor due to something related to the franchisee's actions or business operations, the franchisee is responsible for covering the subfranchisor's costs. This includes not only the direct costs of any settlement or judgment but also the legal expenses incurred in defending against the claim. The franchisee must engage legal counsel reasonably acceptable to the subfranchisor.
However, the Exit franchisee is not required to indemnify or hold harmless the subfranchisor for losses to the extent that those losses are determined to have been caused solely and directly by the subfranchisor's gross negligence, recklessness, willful misconduct, strict liability, or fraud. This provides some protection to the franchisee against being held responsible for the subfranchisor's own actions or failures.
Additionally, Exit's 2025 FDD states that the franchisee will indemnify the subfranchisor for all costs incurred in proceedings related to enforcement of provisions regarding proprietary marks, franchisee obligations upon termination, assignment of the agreement, covenants not to compete, confidentiality, or any act or omission by the franchisee, its employees, or agents that violates laws, is dishonest, or impairs goodwill. These costs include reasonable attorneys' fees, expert witness fees, costs of investigation, court costs, accounting fees, travel and living expenses, and all other related costs incurred by the subfranchisor.