What is the Exit franchisee required to do in the event of a claim arising from the franchisee's business operation?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges the importance of the referral process to the System and shall endeavor to refer requests for real estate services in a location in which Franchisee does not operate to an EXIT Franchisee in that location.
9.6. Defense of Actions
Except as provided in Section 8.3, Franchisee shall assume sole and entire responsibility for fines, suits, proceedings, claims, or damages relating to its business whether asserted by a governmental authority or any other party, or any costs, expenses or liability by reason of any loss of life, or injuries and claimed injuries, sustained in connection with the operation of its real estate service, and shall defend, indemnify and hold EXIT and Subfranchisor harmless from any and all claims, liability or expenses, including attorneys' fees, which EXIT or Subfranchisor may incur as a result of the conduct of Franchisee's business.
**9.7.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, franchisees are responsible for handling claims related to their business operations. Specifically, the franchisee must assume responsibility for any fines, suits, proceedings, claims, or damages linked to their real estate service, regardless of whether these claims come from a governmental body or another party. This includes any costs, expenses, or liability resulting from loss of life, injuries, or claimed injuries that occur in connection with the operation of their Exit real estate service.
Furthermore, the Exit franchisee is obligated to defend, indemnify, and hold Exit and its subfranchisor harmless from any claims, liabilities, or expenses, including attorney's fees, that Exit or the subfranchisor might incur due to the franchisee's business conduct. This means the franchisee is responsible for covering the legal costs and any damages awarded if a claim is made against Exit or the subfranchisor because of something the franchisee did or didn't do in their business operations.
However, the franchisee does not have to indemnify or hold harmless an indemnified party for losses caused solely and directly by the indemnified party's gross negligence, recklessness, willful misconduct, strict liability, or fraud. This provides some protection to the franchisee in situations where the losses are a direct result of the franchisor or subfranchisor's actions. It is important for prospective Exit franchisees to understand the full scope of their responsibilities and potential liabilities, and to ensure they have adequate insurance coverage to protect their business.