Does the indemnification obligation in the Benjamin Franklin Plumbing franchise agreement survive the termination or expiration of the agreement?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree to indemnify Franchisor, its affiliates, and their respective past, present, and future officers, directors, shareholders, employees, and agents (collectively, "Protected Parties") for, and at our option defend the Protected Parties against: (i) any claims (whether or not by a third party) arising directly or indirectly from, as a result of, or in connection with your activities under this Agreement (collectively, "Claims"); and (ii) any liabilities, damages, losses, and expenses the Protected Parties incur as a result of such Claims, including but not limited to attorneys' fees, costs of investigation, settlement costs, fines, civil penalties, and interest charges (collectively, "Expenses"). To the extent permitted by law, this indemnity includes Claims and Expenses alleged to be caused by the negligence of the Protected Parties, unless (and then only to the extent that) the Claim or Expense is finally determined by a court to have been caused solely by the gross negligence or willful misconduct of the Protected Parties. With respect to any threatened or actual litigation, proceeding, or dispute that could directly or indirectly affect any of the Protected Parties, the Protected Parties will have the right, but no obligation, to: (i) choose counsel; (ii) direct, manage, and control the handling of the matter; and (iii) settle any Claim on behalf of the Protected Parties. Your obligations under this Section are not limited by the amount of your insurance coverage. This Section will survive the expiration or termination of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 88–312)
What This Means (2025 FDD)
According to the 2025 Benjamin Franklin Plumbing Franchise Disclosure Document, the indemnification obligations do survive the termination or expiration of the franchise agreement. Specifically, the franchisee's agreement to indemnify Benjamin Franklin Plumbing, its affiliates, and their officers, directors, shareholders, employees, and agents for claims and expenses related to the franchisee's activities under the agreement extends beyond the agreement's term. This means that even after the franchise agreement ends, the franchisee remains responsible for any liabilities, damages, losses, and expenses incurred by Benjamin Franklin Plumbing due to the franchisee's actions during the term of the agreement.
This survival clause has significant implications for prospective Benjamin Franklin Plumbing franchisees. It means that even after the franchise is terminated or expires, the franchisee could still be held liable for past actions or claims arising from their operation of the franchise. This could include legal fees, settlement costs, fines, and other expenses. The franchisee's obligations are not limited by the amount of their insurance coverage, potentially exposing them to substantial financial risk even after they are no longer operating the franchise.
Furthermore, the personal guarantee signed by the Guarantors also includes an indemnity provision. The Guarantors agree to hold harmless, defend, and indemnify the Franchisor Group against any losses, damages, liabilities, costs, and expenses arising out of the franchisee's failure to perform any obligation under the Agreement. This obligation also extends beyond the term of the agreement, meaning that the Guarantors could be held liable for the franchisee's actions even after the franchise agreement ends.
In summary, the survival of the indemnification obligations in the Benjamin Franklin Plumbing franchise agreement and the personal guarantee represents a significant long-term risk for franchisees and their guarantors. It is crucial for prospective franchisees to carefully consider this aspect of the agreement and to seek legal counsel to fully understand the potential implications.