Under what circumstances is a Hardees developer NOT required to indemnify HR and its Indemnitees?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Developer and all guarantors of Developer's obligations under this Agreement shall, at all times, indemnify, defend (with counsel reasonably acceptable to HR), and hold harmless (to the fullest extent permitted by law) HR and its parents and affiliates, and their respective predecessors, successors, assigns, past and present stockholders, directors, managers, officers, members, employees, agents and
representatives (collectively "Indemnitees"), from and against all "losses and expenses" (as defined below) incurred in connection with any action, suit, proceeding, claim, demand, investigation, inquiry (formal or informal), judgment or appeal thereof by or against Indemnitees or any settlement thereof (whether or not a formal proceeding or action had been instituted), arising out of or resulting from or connected with Developer's activities under this Agreement, excluding the gross negligence or willful misconduct of HR. Developer promptly shall give HR written notice of any such action, suit, proceeding, claim, demand, inquiry or investigation filed or instituted against Developer and, upon request, shall furnish HR with copies of any documents from such matters as HR may request.
Source: Item 23 — Receipts (FDD pages 85–541)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, a developer is generally required to indemnify HR (Hardees Restaurants LLC) and its Indemnitees (which include parents, affiliates, stockholders, directors, etc.) against losses and expenses arising from the developer's activities under the Development Agreement. However, this obligation does not extend to situations involving the gross negligence or willful misconduct of HR itself.
This means that if HR's own actions or inactions constitute gross negligence or willful misconduct, the developer is not required to cover the resulting losses and expenses. Gross negligence typically implies a significant deviation from the standard of care, while willful misconduct suggests an intentional disregard for proper conduct.
This provision offers a degree of protection to the Hardees developer, ensuring they are not held responsible for liabilities stemming directly from HR's own serious errors or intentional misdeeds. However, the burden of proof would likely fall on the developer to demonstrate that HR's actions met the threshold of gross negligence or willful misconduct, which can be a challenging legal standard to meet. Franchise agreements commonly include indemnification clauses, but the specific exceptions and limitations can vary significantly, making it important for prospective franchisees to carefully review these provisions with legal counsel.