Does the indemnification agreement with Bang Cookies survive termination of the franchise agreement?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee and each Owner acknowledge and agree that the terms of this Article 10.B. shall survive the termination, expiration or Transfer of this Agreement.
Under no circumstances are the Franchisor Indemnified Parties required or obligated to seek recovery from third parties or otherwise mitigate their respective losses in order to maintain a claim against Franchisee or any Owner.
Franchisee and each of the Owners agree that Franchisor's failure to pursue recovery or mitigate loss in no way reduces the amounts recoverable from Franchisee or any Owner.
10.C. INDEMNIFICATION BY FRANCHISOR
Franchisor shall indemnify, defend, and hold Franchisee and Franchisee's officers, directors, shareholders, members, owners, partners, agents, representatives, independent contractors, employees, assigns and successors (the "Franchisee Indemnified Parties") harmless from all losses, expenses, claims, causes of action, lawsuits, liabilities, taxes, costs, demands, proceedings, investigation, hearing, and/or damages solely arising out of, or solely relating to, Franchisor's gross negligence in the operation of Franchisee's Bang Cookies Shop that was the direct cause of any such loss, expense, liability or damage provided Franchisee immediately notifies Franchisor of such claim, cause of action, lawsuit, demand, proceeding, investigation or hearing, and Franchisor shall pay all of the Franchisee Indemnified Parties' reasonable costs, fees and expenses of defending any such claim, cause of action, lawsuit, demand, proceeding, investigation, and/or hearing brought against any of the Franchisee Indemnified Parties or any such claim, cause of action, lawsuit, demand, proceeding, investigation, and/or hearing in which any of the Franchisee Indemnified Parties is named as a party, including, without limitation, reasonable accountant fees, attorney fees, and expert witness fees, court costs, deposition fees, travel expenses and other litigation expenses provided Franchisee immediately notifies Franchisor of such claim, cause of action, lawsuit, demand, proceeding, investigation or hearing. Franchisor agrees that the terms of this Article 10.C. shall survive the termination, expiration or Transfer of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the indemnification clauses within the franchise agreement survive termination, expiration, or transfer of the agreement. Specifically, Article 10.B, which pertains to the franchisee's indemnification of Bang Cookies, remains in effect even after the franchise agreement ends. Similarly, Article 10.C, which covers Bang Cookies's indemnification of the franchisee, also survives termination, expiration, or transfer.
This means that even after the franchise agreement is terminated, if a claim arises related to the period when the franchise was in operation, the indemnification obligations outlined in the agreement will still apply. For example, if a customer sues Bang Cookies for an incident that occurred during the franchise term, but the lawsuit is filed after the franchise agreement has ended, the franchisee may still be responsible for indemnifying Bang Cookies if the claim falls under the scope of Article 10.B. Conversely, Bang Cookies would still be responsible for indemnifying the franchisee under the conditions described in Article 10.C.
It is important for prospective franchisees to understand the scope and implications of these indemnification clauses. Franchisees should carefully review Articles 10.B and 10.C of the franchise agreement to fully understand their obligations and rights regarding indemnification, both during the term of the agreement and after its termination. This ensures that all parties are aware of their responsibilities even after the franchise relationship concludes.