Does the Bombs Away franchisee's indemnity obligation continue after the franchise agreement ends?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
- 16.1 Indemnity. Franchisee shall indemnify and defend (with counsel reasonably acceptable to Bombs Away Franchising) Bombs Away Franchising, 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 Bombs Away Franchising and/or any Indemnitee directly or indirectly related to, or alleged to arise out of, the operation of the Business. Notwithstanding the foregoing, Franchisee shall not be obligated to indemnify an Indemnitee from Actions arising 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.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the franchisee's obligation to indemnify Bombs Away continues even after the franchise agreement ends. Specifically, the franchisee must indemnify and defend Bombs Away Franchising against all losses related to the operation of the Bombs Away business. This includes covering legal costs and damages resulting from any action against Bombs Away Franchising.
However, the franchisee is not required to indemnify Bombs Away for actions arising from Bombs Away's intentional misconduct or negligence. Additionally, any delay or failure by Bombs Away to notify the franchisee of an action does not relieve the franchisee of their indemnity obligation, unless the delay materially prejudices the franchisee. The franchisee cannot settle any action without the consent of Bombs Away.
This extended indemnity obligation means that even after a Bombs Away franchise agreement expires or is terminated, the franchisee could still be liable for costs and damages arising from their past operation of the business. This is a significant consideration for prospective franchisees, as it represents a long-term potential liability that extends beyond the active term of the franchise agreement. Franchisees should carefully assess their risk management strategies and insurance coverage to account for this ongoing obligation.