Does the All County franchisee's indemnification obligation continue after the Franchise Agreement expires or terminates?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee, and each of the Guarantors identified in Appendix C to the Franchise Agreement, agrees that it shall, at all times, indemnify, exculpate, defend and hold harmless, to the fullest extent permitted by law, All County, its successor, assigns, affiliates and the respective officers, directors, shareholders, agents, representatives, independent contractors, servants, and employees of each of them (the "Indemnified Parties") from all losses and expenses incurred in connection with any action, suit, proceeding, claim, demand, investigation, or inquiry (formal or informal), or any settlement thereof, which arises out of or is based upon the Reconciliation Assistance Program. For purposes of this indemnification, "claims" includes all obligations, damages (actual, consequential or otherwise) and costs incurred in the defense of any claim against any of the Indemnified Parties, including, without limitation, reasonable accountants', arbitrators', attorneys' and expert witness fees, costs of investigation and proof of facts, court costs, other expenses of litigation, arbitration or alternative dispute resolution and travel expenses. All County has the right to defend any such claim at your expense. This indemnity will continue in full force and effect subsequent to and notwithstanding the expiration or termination of the Franchise Agreement.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, the franchisee's obligation to indemnify All County extends beyond the termination or expiration of the Franchise Agreement. This means that even after the agreement ends, the franchisee remains responsible for covering certain losses and expenses incurred by All County.
Specifically, the franchisee must indemnify, defend, and hold harmless All County and its related parties from losses and expenses tied to any action, suit, claim, or investigation arising from the Reconciliation Assistance Program. This indemnification covers all obligations, damages (both actual and consequential), and costs related to defending against claims. These costs include accountants', arbitrators', attorneys', and expert witness fees, investigation costs, court costs, and travel expenses. All County retains the right to defend any such claim at the franchisee's expense.
This extended indemnification obligation has significant implications for prospective All County franchisees. Even after ceasing operations under the All County brand, the franchisee could still face financial liabilities if claims arise related to their participation in the Reconciliation Assistance Program during the term of the franchise agreement. Franchisees should carefully consider the potential long-term financial risks associated with this indemnification clause.