Under what circumstances does a Jack In The Box franchisee have to indemnify the franchisor?
Jack_In_The_Box Franchise · 2025 FDDAnswer from 2025 FDD Document
or or DMO shall hire all employees of the Franchised Restaurant, but Franchisee shall be fully responsible for the terms of their employment.
While on the Premises, Franchisee, Operator (or, if applicable, a Designated Market Operator) and all employees must meet Company's Standards relating to grooming, and wear the uniforms approved or mandated by Company. Company is not responsible for providing uniforms for Franchisee's employees.
K. Compliance with Laws
Franchisee agrees at all times during the term of this Agreement, at its own expense, to conform to and comply with all federal, state and local laws, ordinances and regulations now in force or that are hereafter enacted affecting the operation of the Franchised Restaurant business, including, without limitation, wage and hour laws, labor laws, the Americans with Disabilities Act, OSHA, the Sherman Act, the Federal Trade Commission Act, the Clayton Act, and the USA PATRIOT Act; any security standards (such as the Payment Card Industry Data Security Standard) imposed by the credit card or similar industries; and any similar federal, state, and local laws. Franchisee shall not enter into any agreement or understanding with any competitor, including other Jack in the Box® franchisees, that would result in a restraint of trade in violation of federal, state, or local laws. Franchisee hereby indemnifies Company, its Affiliates, employees, officers, directors and agents against, and agrees to save them harmless from, all claims, demands, losses, liabilities, obligations, costs or expenses (including attorneys' fees and court costs) which result from or arise in connection with any alleged violation of any law, ordinance or regulation, whether occasioned by the neglect, omission or willful act of Franchisee or any other person on the Premises.
Source: Item 23 — RECEIPT (FDD pages 94–634)
What This Means (2025 FDD)
According to the 2025 Jack In The Box Franchise Disclosure Document, a franchisee must indemnify the company, its affiliates, employees, officers, directors, and agents from claims, demands, losses, liabilities, obligations, costs, or expenses. This includes attorneys' fees and court costs, which result from or arise in connection with any alleged violation of any law, ordinance, or regulation. This obligation extends to actions caused by the neglect, omission, or willful act of the franchisee or any other person on the premises.
Furthermore, the Jack In The Box franchisee is responsible for all losses, damages, and liabilities arising from the possession, ownership, or operation of the franchised restaurant. This also covers all claims or demands for damages to property, or for injury, illness, or death of persons directly or indirectly resulting from these activities. The franchisee is required to defend, indemnify, and hold harmless Jack In The Box and its related parties from all such claims, demands, losses, obligations, costs, attorneys' fees, expenses, liabilities, debts, or damages directly or indirectly resulting from these activities.
However, the obligation to indemnify Jack In The Box does not apply if the claims, demands, losses, etc., result from the gross negligence or willful misconduct of the indemnified parties (i.e., Jack In The Box, its affiliates, etc.). This means that if Jack In The Box or its related parties are directly responsible through gross negligence or willful misconduct for the issue that led to the claim, the franchisee is not required to cover the associated costs and liabilities. This is a fairly standard clause in franchise agreements, designed to protect the franchisor from liabilities arising from the franchisee's operation of the business, while also providing an exception in cases where the franchisor's own actions are the cause of the issue.