Who are the 'Indemnified Parties' that the Potbelly Sandwich Works developer must indemnify?
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 "Indemnified Parties" are Potbelly Sandwich Works, its Affiliates, and their respective owners, shareholders, members, directors, officers, employees, agents, successors, and assignees.
As a Potbelly Sandwich Works developer, you are obligated to protect these Indemnified Parties from claims, obligations, and damages that arise directly or indirectly from the development of Potbelly Shops under the SDAA (Single Development Area Agreement), your business activities conducted under the SDAA, or any breach of the SDAA. This includes covering costs incurred in defending against claims, such as accountant, arbitrator, attorney, and expert witness fees, as well as costs related to investigation, proof of facts, court costs, travel, and other litigation-related expenses.
However, there is an exception: you are not required to indemnify an Indemnified Party if a court or arbitrator determines that the claims, obligations, and damages were caused solely and directly by the Indemnified Party's gross negligence, willful misconduct, or willful wrongful omissions. This exception does not apply if the claim is based on vicarious liability or Potbelly Sandwich Works's failure to compel your compliance with the SDAA. Each Indemnified Party has the right to defend any claim at your expense and can agree to settlements or take other corrective actions.