Does the Anago franchise agreement's indemnification obligation continue after the agreement expires or terminates?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
You are responsible for all losses or damages from contractual liabilities to third persons from the possession, ownership and operation of the Anago Unit Franchise and for all claims and demands for damages to property or for injury, illness or death of persons directly or indirectly resulting from Your actions. You will indemnify Us from all costs, losses and damages (including reasonable attorneys' fees and costs, even if incident to appellate, post judgment or bankruptcy proceedings) from claims brought by third parties involving (a) Your ownership or operation of the Anago Unit Franchise or (b) from Your breach of this Agreement unless caused by Our gross negligence or intentional misconduct. You must also defend, indemnify and hold Us and AFI harmless from and against any claims asserting that AFI or We are the employer or joint or coemployer of You or Your employees. These indemnity obligations continue in full effect even after the expiration or termination of this Agreement. We will notify You of any claims and You will be given the opportunity to assume the defense of the matter. If You fail to assume the defense, We may defend the action in the manner We deem appropriate and You will pay to Us all costs, including attorneys' fees, We incur in effecting the defense, in addition to any sum that We pay by reason of any settlement or judgment against Us. Our right to indemnity under this Agreement arises and is valid regardless of any joint or concurrent liability that may be imposed on Us by statute, ordinance, regulation or other law.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, the franchisee's obligation to indemnify Anago continues even after the franchise agreement expires or terminates. Specifically, the franchisee must indemnify Anago from costs, losses, and damages, including attorney's fees, resulting from third-party claims related to the franchisee's ownership or operation of the Anago Unit Franchise, or from the franchisee's breach of the agreement. This indemnification extends to claims asserting that Anago or its affiliate, AFI, is the employer or joint employer of the franchisee or their employees.
This means that even after the franchise agreement ends, an Anago franchisee could still be responsible for financial losses incurred by Anago due to the franchisee's actions or inactions during the term of the agreement. This includes legal costs and damages arising from lawsuits or other claims. Anago will notify the franchisee of any such claims and give them the opportunity to defend the matter. However, if the franchisee fails to assume the defense, Anago can defend the action as it deems appropriate, and the franchisee will be responsible for all costs, including attorney's fees, incurred by Anago in the defense, as well as any settlement or judgment amounts.
This survival clause is a standard practice in franchising, designed to protect the franchisor from liabilities that may arise even after the franchisee has ceased operating under the brand. Prospective Anago franchisees should carefully consider this ongoing obligation and ensure they maintain adequate insurance coverage and operate their business in a manner that minimizes the risk of third-party claims. Understanding the scope of this indemnification obligation is crucial for assessing the long-term financial risks associated with the Anago franchise.