Does the indemnity obligation of a Better Blend franchisee continue after the franchise agreement ends?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
ARTICLE 16. INDEMNITY
- 16.1 Indemnity. Franchisee shall indemnify and defend (with counsel reasonably acceptable to BBF) BBF, its parent entities, subsidiaries and affiliates, and their respective owners, directors, officers, employees, agents, successors and assignees (collectively, "Indemnitees") against all Losses in any Action by or against BBF and/or any Indemnitee directly or indirectly related to, or alleged to arise out of, the development or operation of the Business (including any Data Security Event), or any act or omission of Franchisee or any of Franchisee's Owners, officers, directors, employees or agents. Notwithstanding the foregoing, Franchisee shall not be obligated to indemnify an Indemnitee from Actions which Franchisee proves arose solely as a result of any Indemnitee's intentional misconduct or negligence. Any delay or failure by an Indemnitee to notify Franchisee of an Action shall not relieve Franchisee of its indemnity obligation except to the extent (if any) that such delay or failure materially prejudices Franchisee. Franchisee shall not settle an Action without the consent of the Indemnitee. This indemnity will continue in effect after this Agreement ends.
- 16.2 Assumption. An Indemnitee may elect to assume the defense of any Action subject to this indemnification, and control all aspects of defending the Action, including negotiations and settlement, at Franchisee's expense. Such an undertaking shall not diminish Franchisee's obligation to indemnify the Indemnitees.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, the franchisee's obligation to indemnify Better Blend extends beyond the termination of the franchise agreement. Specifically, the franchisee must indemnify and defend Better Blend, its parent entities, subsidiaries, affiliates, and their respective owners, directors, officers, employees, agents, successors, and assignees against all losses in any action related to the development or operation of the Better Blend business. This includes actions arising from any act or omission of the franchisee or their owners, officers, directors, employees, or agents.
However, the franchisee is not required to indemnify Better Blend if the action arose solely from the intentional misconduct or negligence of the indemnitee. Additionally, any delay or failure by Better Blend to notify the franchisee of an action does not relieve the franchisee of their indemnity obligation, except to the extent that such delay or failure materially prejudices the franchisee. The franchisee is also prohibited from settling any action without Better Blend's consent.
Better Blend retains the right to assume the defense of any action subject to indemnification, controlling all aspects of the defense, including negotiations and settlement, at the franchisee's expense. This assumption of defense does not diminish the franchisee's obligation to indemnify Better Blend. The explicit statement that the indemnity obligation continues after the agreement ends means that even after the franchise relationship concludes, the franchisee may still be liable for certain actions or omissions that occurred during the term of the agreement.