Does the Southern Steer franchisee's indemnification obligation extend to claims related to breaches of security?

According to the 2025 Southern Steer Franchise Disclosure Document, the franchisee's indemnification obligations do extend to claims related to breaches of security. Specifically, the franchisee must indemnify the franchisor for damages arising from breaches of security, regardless of whether the franchisor is required to take action under state or federal law. This obligation also extends to violations of data privacy laws and failure to comply with PCI DSS or other information security standards required by Southern Steer.

This means that if a Southern Steer franchisee experiences a data breach or fails to protect customer information adequately, they could be held financially responsible for any resulting damages, including fines, penalties, and legal costs incurred by the franchisor. The franchisor has the right to take action to remedy a security breach, including investigating the cause and notifying affected parties, and the franchisee is obligated to cooperate and provide necessary information. The franchisee will bear all costs associated with the breach and compliance with relevant laws.

However, the franchisee is not required to indemnify the franchisor for damages resulting from the franchisor's gross negligence or intentional misconduct. This provides some protection to the franchisee, ensuring they are not liable for issues caused directly by the franchisor's actions. It is important for prospective franchisees to understand the scope of their indemnification obligations and to implement robust security measures to protect sensitive data and prevent breaches.

Indemnification clauses are standard in franchise agreements, but the specific terms can vary. The Southern Steer franchise agreement places a significant responsibility on the franchisee to protect against security breaches and data privacy violations, which is increasingly important in today's business environment. Prospective franchisees should carefully review these provisions with legal counsel to fully understand their potential liabilities and ensure they have adequate insurance coverage.