Does the Exit franchise agreement specify who the franchisee must defend in an indemnification claim?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the franchisee is required to indemnify, defend, and hold harmless the subfranchisor, Exit, their affiliates, officers, directors, employees, and officials. This obligation extends to any claims and associated costs, including attorney's fees, that arise directly or indirectly from the franchisee's operation of the business, both during and after the term of the franchise agreement. This indemnification specifically includes claims from franchisees relating to services the franchisee performs on the subfranchisor's behalf.
However, the Exit franchisee's obligation to indemnify and hold harmless the indemnified party does not apply to losses caused solely and directly by the indemnified party's gross negligence, recklessness, willful misconduct, strict liability, or fraud. The subfranchisor, in turn, must indemnify and protect the franchisee from claims arising from the subfranchisor's actions, omissions, contracts, debts, or obligations, including the cost of defending against such claims.
This indemnification clause means that as an Exit franchisee, you could be responsible for covering legal costs and damages incurred by the franchisor or related parties due to your business operations. It is important to understand the scope of this obligation and the exceptions, particularly regarding the franchisor's own conduct. Prospective franchisees should seek legal counsel to fully understand their responsibilities and potential liabilities under this clause.