Under what circumstances is a Hardees franchisee NOT required to indemnify HR and the Indemnitees?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee and all guarantors of Franchisee'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, employees, members, 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 HR and/or 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 Franchisee's activities under this Agreement, excluding the gross negligence or willful misconduct of HR. Franchisee promptly shall give HR written notice of any such action, suit, proceeding, claim, demand, inquiry or investigation filed or instituted against Franchisee and, upon request, shall furnish HR with copies of any documents from such matters as HR may request.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, a franchisee is generally required to indemnify HR (Hardees Restaurants LLC) and its Indemnitees (parents, affiliates, stockholders, directors, etc.) against losses and expenses arising from the franchisee's activities under the Franchise Agreement. However, this indemnification requirement does not apply if the losses and expenses are due to the gross negligence or willful misconduct of HR itself.
In practical terms, this means that if a third party sues Hardees due to something the franchisee did (or failed to do) while operating their Hardees restaurant, the franchisee is responsible for covering Hardees's legal costs and any resulting damages. The franchisee must also defend Hardees against such claims with legal counsel reasonably acceptable to Hardees. However, if the issue arises due to Hardees's own gross negligence or intentional misconduct, the franchisee is not required to cover Hardees's losses and expenses.
This indemnification clause is a standard provision in franchise agreements. It aims to protect the franchisor from liabilities caused by the franchisee's actions. However, the exception for Hardees's own gross negligence or willful misconduct ensures that the franchisee is not held responsible for Hardees's own failings. A prospective Hardees franchisee should carefully consider this indemnification clause and consult with a legal professional to fully understand its implications.