Franchisors must protect their businesses from laws and liability. Indemnification and disclaimer clauses in franchise agreements, while they may not always hold, are at least one way to help with this along with other strategies.

In my franchise agreements for my company, I have addressed this issue by slightly modifying our disclaimers in our franchise agreements. Below is a copy of one of the earliest versions of the clauses we use in our franchise agreements;

3.26 Indemnification/Disclaimer

The Franchisee agrees to defend itself at its own expense and to indemnify and hold harmless the Franchisor, its affiliates and their predecessors, sister or co-branded companies, their shareholders, directors, officers, members, employees, agents and their spouses, from and against any and all losses, costs, expenses (including attorneys’ fees), damages and liabilities arising from its negligence, failure to maintain or repair, breach of contract or other civil damages, directly or indirectly resulting from or related to the use, condition equipment, maintenance, or operation of your car wash unit/truck, including the preparation and sale of any products or services made or sold from your mobile car wash unit. Such losses, claims, costs, expenses, damages and liabilities shall include, but are not limited to, those arising from latent or other defects in the trucks, units and equipment, whether or not discoverable by the franchisor, and those arising from the death or injury of any person or arising out of damage to your property or to ours, our agents or employees, or any third party, firm or corporation, whether such losses, claims, costs, expenses, damages or liabilities have actually or allegedly been caused in whole or in part through our active or passive negligence or any of our agents or employees or as a result of any strict liability imposed on the Franchisor or any of our employees.

Franchisee shall indemnify and hold harmless Franchisor and its affiliates and their predecessor, sister or co-branded companies from and against any and all reasonable attorneys’ fees, liabilities, expenses, claims, demands, actions or causes of action in which can be incurred. by or threatened against the Franchisor or its affiliates and arising from

(i) the operation of the Franchisee of the Franchise Business, or

(ii) any transaction between the Franchisee and any third party or

(iii) Improper use of the Trademarks by the Franchisee.

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All franchisees in the business need to be concerned about this and it would be very smart and wise to contact a knowledgeable and experienced franchise attorney to ensure that you are protected in your franchise agreements. I hope you deal with this in 2006.