What is the Gold Star franchisee's obligation regarding defending the company against claims, in addition to indemnifying and holding harmless?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE will indemnify, defend and hold the COMPANY harmless from and against any and all claims, debts, liabilities or obligations arising directly or indirectly from, as a result of or in connection with the operation of the Store (excluding, however, liabilities caused by (i)
FRANCHISEE's proper reliance on or use of procedures or materials provided by the COMPANY, or (ii) the COMPANY's gross negligence), and will pay all costs (including, without limitation, legal and accounting fees) incurred by the COMPANY in defending against and/or responding to them. FRANCHISEE WILL DISPLAY PROMINENTLY AT ITS PLACE OF BUSINESS, ON ALL CORRESPONDENCE WITH THIRD PARTIES, AND IN ANY PRINTED MATERIALS BEARING ITS NAME OR BUSINESS LOCATION, A STATEMENT THAT THE STORE IS INDEPENDENTLY OWNED AND OPERATED BY FRANCHISEE.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, franchisees have an obligation to defend the company against claims under certain circumstances. Specifically, the franchisee must indemnify, defend, and hold Gold Star harmless from any claims, debts, liabilities, or obligations arising directly or indirectly from the operation of the store. This includes paying all costs, such as legal and accounting fees, that Gold Star incurs while defending against or responding to these claims. However, this obligation does not extend to liabilities caused by the franchisee's proper reliance on procedures or materials provided by Gold Star, or by Gold Star's own gross negligence.
In practical terms, this means that if a customer sues Gold Star because of something that happened at the franchisee's location (excluding issues caused by Gold Star's direct actions or materials), the franchisee is responsible for covering Gold Star's legal defense and any resulting judgments. This could include incidents like a customer injury on the property or a dispute arising from the franchisee's business practices. The franchisee's responsibility extends to all costs Gold Star incurs in defending against such claims, including attorney and accounting fees.
This requirement highlights the importance of franchisees maintaining adequate insurance coverage and adhering to all operational standards and legal requirements. Franchisees should also ensure they understand the scope of their responsibilities and liabilities under the franchise agreement, particularly regarding indemnification and defense obligations. Furthermore, franchisees are required to display prominently at their place of business, on all correspondence with third parties, and in any printed materials bearing its name or business location, a statement that the store is independently owned and operated by the franchisee.