Does the Bumper Man franchisee's indemnification obligation extend beyond the termination or expiration of the franchise agreement?
Bumper_Man Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE, ON ITS BEHALF AND ON BEHALF OF ITS AFFILIATES AND PRINCIPALS, WILL INDEMNIFY, DEFEND AND HOLD HARMLESS THE FRANCHISOR INDEMNITEES AGAINST AND REIMBURSE ANY ONE OR MORE OF THE FRANCHISOR INDEMNITEES FOR ANY AND ALL LOSSES AND EXPENSES ARISING OUT OR FROM OR RELATED TO, ANY CLAIMS, DIRECTLY OR INDIRECTLY, ARISING OUT OR FROM OR RELATED TO: (A) THE OPERATION OR CLOSING OF THE BUMPER BUSINESS; (B) ANY BREACH OF THIS AGREEMENT BY FRANCHISEE, ITS AFFILIATES OR ANY PRINCIPAL, OR FRANCHISEE'S, ITS AFFILIATES' OR ANY PRINCIPAL'S BREACH OF ANY OTHER AGREEMENT BETWEEN FRANCHISOR OR ITS AFFILIATES AND FRANCHISEE, ITS AFFILIATES, (C) THE MARKETING, PROMOTION OR ADVERTISEMENT OF THE BUMPER BUSINESS OR DESIGNATED SERVICES OFFERED BY THE BUMPER BUSINESS, INCLUDING UNFAIR OR FRAUDULENT ADVERTISING CLAIMS (WHETHER IN PRINT ADVERTISING OR ELECTRONIC MEDIA), OR (D) FRANCHISEE'S PERFORMANCE OF BUMPER REPAIR SERVICES FOR ANY INDIVIDUAL CONSUMER.
FRANCHISOR HAS THE RIGHT, AT ITS OPTION, TO DEFEND ANY SUCH CLAIM AGAINST IT AT FRANCHISEE'S SOLE COST AND EXPENSE. IF FRANCHISEE DEFENDS ANY CLAIM, IT MAY NOT ENTER INTO ANY SETTLEMENT AGREEMENT OR OTHERWISE RESOLVE OR CONCLUDE THE MATTER WITHOUT FRANCHISOR'S PRIOR WRITTEN CONSENT. THIS INDEMNITY WILL CONTINUE IN FULL FORCE AND EFFECT SUBSEQUENT TO, AND NOTWITHSTANDING, THE EXPIRATION OR TERMINATION OF THIS AGREEMENT. UNDER NO CIRCUMSTANCES WILL FRANCHISOR OR ANY OTHER FRANCHISOR INDEMNITEES BE REQUIRED TO SEEK RECOVERY FROM ANY INSURER OR OTHER THIRD PARTY, OR OTHERWISE TO MITIGATE ITS OR FRANCHISEE'S LOSSES AND EXPENSES, IN ORDER TO MAINTAIN AND RECOVER FULLY A CLAIM AGAINST FRANCHISEE. ANY FAILURE TO PURSUE SUCH RECOVERY OR MITIGATE A LOSS WILL IN NO WAY REDUCE OR ALTER THE AMOUNTS RECOVERABLE BY FRANCHISOR OR ANOTHER FRANCHISOR INDEMNITEE FROM FRANCHISEE.
Source: Item 23 — RECEIPTS (FDD pages 45–180)
What This Means (2025 FDD)
According to Bumper Man's 2025 Franchise Disclosure Document, the franchisee's indemnification obligations do extend beyond the expiration or termination of the franchise agreement. Specifically, the franchisee is required to indemnify, defend, and hold harmless the franchisor against losses and expenses related to claims arising from the operation or closing of the Bumper Business, any breach of the agreement, the marketing and advertisement of services, or the franchisee's performance of bumper repair services.
This obligation continues even after the franchise agreement has expired or been terminated. The franchisor has the right to defend any claim at the franchisee's expense, and the franchisee cannot settle any claim without the franchisor's written consent.
This extended indemnification clause means that a former Bumper Man franchisee could be held liable for events that occurred during the term of their franchise, even after they are no longer operating the business. This is a significant obligation that prospective franchisees should carefully consider, as it could result in ongoing financial exposure even after the franchise relationship ends. The franchisor is not required to seek recovery from any insurer or mitigate losses before claiming against the franchisee.