Under what circumstances is an Exit franchisee NOT obligated to indemnify or hold harmless an indemnified party?

According to Exit's 2025 Franchise Disclosure Document, a franchisee is generally required to indemnify and hold harmless the subfranchisor, Exit, and their affiliates. However, there are specific circumstances under which this obligation does not apply. Indemnification means the franchisee must protect the specified parties from claims, costs, and liabilities arising from the franchisee's business operations. This includes covering legal fees and other expenses related to defending against such claims.

Specifically, Exit franchisees are not required to indemnify or hold harmless an indemnified party for losses that are determined to have been caused solely and directly by the indemnified party's gross negligence, recklessness, willful misconduct, strict liability, or fraud. This means that if the subfranchisor, Exit, or their affiliates are directly responsible for the losses due to their own actions or inactions that fall into these categories, the franchisee is not obligated to provide indemnification.

This provision protects franchisees from being held liable for the misconduct or negligence of Exit or its related parties. It is important for prospective franchisees to understand the scope of their indemnification obligations and the exceptions to those obligations. Franchisees should consult with legal counsel to fully understand their rights and responsibilities under the franchise agreement.