Under what circumstances is the limitation of liability clause in the Hardees agreement NOT applicable, potentially exposing a party to unlimited liability?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
") (the indemnification obligation of each Party described in this clause (iii), the "IP Infringement Obligation"). The previous sentence states the sole liability of the Indemnifying Party, and the sole remedy of the Indemnified Party, with respect to any third-party claim arising out of the Indemnifying Party's negligent acts or omissions (other than claims arising from fraud, criminal activity or willful misconduct).
7.2. Additionally, Customer shall defend, indemnify and hold harmless Olo and and its officers, directors and employees (each, an
"Indemnified Party") from all third-party claims and liabilities (including reasonable outside attorney'sfees) arising out of or relating to (i) any action against Olo arising out of any Customer Third Party Provider's disclosure or misuse of Customer Data or related to Olo's release of such Customer Data, including PII, if the release of such information was requested in writing by Customer; (ii) Customer's failure to properly collect and remit taxes or other government payments or fees associated with its usage of the Services, which shall be the sole responsibility of the Customer and, if applicable, the Authorized O
Source: Item 23 — Receipts (FDD pages 85–541)
What This Means (2025 FDD)
According to the 2025 Hardees Franchise Disclosure Document, the limitation of liability clause does not apply in cases of either party's intellectual property (IP) infringement indemnification obligations, gross negligence, willful misconduct, or breach of confidentiality, data privacy, or data security. This means that in these specific situations, either Hardees or the franchisee could be exposed to liability exceeding the standard limitations outlined in the franchise agreement.
Specifically, the standard cumulative liability for damages arising from the agreement is capped at $5,000,000. However, this $5 million cap does not apply to the aforementioned exceptions. For liabilities not covered by these exceptions, the total cumulative liability is limited to the amount of fees paid or payable to Olo (a third-party service provider) in connection with Olo's provision of services during the 12 months before the date when the liability arose. This tiered system of liability limitations indicates that Hardees places a higher degree of importance on protecting intellectual property, preventing gross negligence and willful misconduct, and maintaining confidentiality, data privacy, and data security.
For a prospective Hardees franchisee, this means that while there is a general limit to potential liability, certain actions or failures can expose them to significantly higher financial risks. It is crucial to understand the scope of these exceptions and to implement robust measures to protect intellectual property, avoid negligence, and ensure data security. Franchisees should seek legal counsel to fully understand their obligations and potential liabilities under the franchise agreement.