Is Afuri Ramen Dumpling liable for any costs related to the franchisee's opening and operation of the franchise?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
- C. As a franchisee, you are in an independent contractor relationship with us. You independently own and operate your Franchise. While we establish standards and recommendations for desired outcomes to protect our systems and brand, as an independent contractor franchisee, you generally determine the means to accomplish such outcomes. You are responsible for the day-to-day operation of your Franchise.
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- Indemnification. Franchisee shall indemnify, defend and hold harmless Franchisor and its affiliates against all losses, costs, proceedings, judgments, liabilities, expenses, court costs, and reasonable fees of attorneys and other professionals arising out of or related to: (1) any breach of the representations and warranties set out in this Addendum; (2) the operation of any Pre-Existing Business; or (3) any willful or negligent act or omission of Franchisee or Franchisee's owners, directors, officers, employees or agents (or those of any Pre-Existing Business). This indemnity includes but is not limited to any act or omission that contributes to any economic damage, bodily injury, sickness, disease or death. This indemnity shall survive termination of the Franchise Agreement.
When an individual franchise is sold, the Company agrees to license the Afuri name to the franchisee, provide site selection criteria and design plans for the restaurant, assist in developing the restaurant and implementing the grand opening advertising, and provide the initial training program, among others.
The franchise agreements typically require the franchisee to pay an initial, non-refundable fee of $45,000, which includes required training costs. The franchise agreements also require the franchisee to pay monthly royalty fees based on revenue levels. The franchisee pays marketing fees monthly to cover advertising, market research, and search engine optimization.
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to the 2024 Afuri Ramen Dumpling Franchise Disclosure Document, the franchisee operates as an independent contractor and is generally responsible for the day-to-day operations of their franchise. While Afuri Ramen Dumpling establishes standards and recommendations, the franchisee determines the means to accomplish the desired outcomes. The franchisee also indemnifies Afuri Ramen Dumpling and its affiliates against losses, costs, and liabilities arising from any breach, operation of a pre-existing business, or any negligent act or omission by the franchisee. This indemnification extends to economic damage, bodily injury, sickness, disease, or death and survives the termination of the Franchise Agreement.
Afuri Ramen Dumpling's FDD states that when an individual franchise is sold, Afuri Ramen Dumpling agrees to license the Afuri name to the franchisee, provide site selection criteria and design plans for the restaurant, assist in developing the restaurant and implementing the grand opening advertising, and provide the initial training program, among others. The franchise agreement typically requires the franchisee to pay an initial, non-refundable fee of $45,000, which includes required training costs. The franchise agreements also require the franchisee to pay monthly royalty fees based on revenue levels and marketing fees monthly to cover advertising, market research, and search engine optimization.
In essence, the franchisee bears the primary responsibility for the costs associated with opening and operating the Afuri Ramen Dumpling franchise. The franchisee is responsible for indemnifying Afuri Ramen Dumpling against various liabilities, reinforcing the franchisee's role as an independent operator. While Afuri Ramen Dumpling provides initial support and training, the ongoing financial burden and operational liabilities largely fall on the franchisee.