Under what circumstances are Exit franchisees not obligated to indemnify or hold harmless an indemnified party?

According to Exit's 2025 Franchise Disclosure Document, Exit franchisees are not required to indemnify or hold harmless an indemnified party under specific circumstances related to the indemnified party's actions.

Specifically, Exit franchisees have no obligation to indemnify or hold harmless an indemnified party for losses if those losses are determined to have been caused solely and directly by the indemnified party's gross negligence, recklessness, willful misconduct, strict liability, or fraud. This provision outlines clear boundaries for the franchisee's responsibility, protecting them from liability for damages directly resulting from the franchisor or other indemnified party's serious misconduct.

This clause is important for prospective Exit franchisees as it clarifies the limits of their liability and ensures they are not held responsible for situations arising from the franchisor's or other indemnified parties' actions. It is a risk-management measure that protects franchisees from undue financial burden due to circumstances outside their control, providing a more balanced relationship between the franchisee and franchisor regarding liability and risk.