What does the Potbelly Sandwich Works developer agree to do regarding indemnification?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
5.02 Indemnification. You agree to indemnify, defend, and hold harmless us, our Affiliates, and our and their respective owners, shareholders, members, directors, officers, employees, agents,
successors, and assignees (the "Indemnified Parties") against, and to reimburse any one or more of the Indemnified Parties for, all claims, obligations, and damages directly or indirectly arising out of the development of Potbelly Shops under this SDAA, your business activities conducted under or arising from this SDAA, or your breach of this SDAA. You also agree to defend the Indemnified Parties (unless an Indemnified Party chooses to defend at your expense as provided in the following paragraph) against any and all such claims, inquiries, actions, investigations, and proceedings, including those alleging the Indemnified Party's negligence, gross negligence, willful misconduct, and willful wrongful omissions. However, you have no obligation to indemnify or hold harmless an Indemnified Party for any claims, obligations, and damages to the extent they are determined in a final, unappealable ruling issued by a court or arbitrator with competent jurisdiction to have been caused solely and directly by the Indemnified Party's gross negligence, willful misconduct, or willful wrongful omissions, so long as the claim to which those obligations and damages relate is not asserted on the basis of theories of vicarious liability (including agency, apparent agency, or joint employment) or our failure to compel you to comply with this SDAA.
For purposes of this indemnification, "claims" include all obligations, damages (actual, consequential, or otherwise), and costs that any Indemnified Party reasonably incurs in defending any claim against it, including, without limitation, reasonable accountants', arbitrators', attorneys', and expert witness fees, costs of investigation and proof of facts, court costs, travel and living expenses, and other expenses of litigation, arbitration, or alternative dispute resolution, regardless of whether litigation, arbitration, or alternative dispute resolution is commenced. Each Indemnified Party may defend any claim against it at your expense and agree to settlements or take any other remedial, corrective, or other actions.
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, the developer agrees to indemnify, defend, and hold harmless Potbelly Sandwich Works, its affiliates, and their respective owners, shareholders, members, directors, officers, employees, agents, successors, and assignees (collectively known as the "Indemnified Parties"). This indemnification covers all claims, obligations, and damages that directly or indirectly arise from the development of Potbelly Shops under the SDAA (Site Development Area Agreement), the developer's business activities conducted under or arising from the SDAA, or any breach of the SDAA. The developer also agrees to defend the Indemnified Parties against any and all such claims, inquiries, actions, investigations, and proceedings, including those alleging the Indemnified Party's negligence, gross negligence, willful misconduct, and willful wrongful omissions.
However, the developer's obligation to indemnify or hold harmless an Indemnified Party is limited. They are not obligated to cover claims, obligations, and damages to the extent that a court or arbitrator with competent jurisdiction determines that these were caused solely and directly by the Indemnified Party's gross negligence, willful misconduct, or willful wrongful omissions. This exception applies only if the claim is not based on theories of vicarious liability, such as agency, apparent agency, or joint employment, or Potbelly Sandwich Works's failure to compel the developer to comply with the SDAA.
For the purposes of this indemnification, "claims" include all obligations, damages (actual, consequential, or otherwise), and costs that any Indemnified Party reasonably incurs in defending any claim against it. These costs include, but are not limited to, reasonable accountants', arbitrators', attorneys', and expert witness fees, costs of investigation and proof of facts, court costs, travel and living expenses, and other expenses related to litigation, arbitration, or alternative dispute resolution, regardless of whether such proceedings are commenced. Each Indemnified Party has the right to defend any claim against it at the developer's expense and can agree to settlements or take any other remedial, corrective, or other actions.