Does the indemnification obligation of C3 Wellness Spa survive the termination, expiration, or transfer of the franchise agreement?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
10.B. INDEMNIFICATION BY FRANCHISEE
Franchisee and each Owner shall indemnify, defend through counsel acceptable to Franchisor, and hold Franchisor, Franchisor's affiliates, and their respective officers, directors, shareholders, members, owners, partners, agents, representatives, independent contractors, employees, assigns and successors (the "Franchisor Indemnified Parties") harmless from all losses, expenses, claims, causes of action, lawsuits, liabilities, taxes, costs, demands, proceedings, investigations, hearings, and/or damages arising out of, or relating to, Franchisee's Spa Facility, Franchisee's Spa Location, and/or the Franchised Business (including, without limitation, the ownership and operation of the Franchised Business), unless such loss, expense, claim, cause of action, lawsuit, liability, tax, cost, demand, proceeding, or damage is solely due to Franchisor's gross negligence, and Franchisee shall pay all of the Franchisor 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 Franchisor Indemnified Parties or any such claim, cause of action, lawsuit, demand, proceeding, investigation, and/or hearing in which any of the Franchisor 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. At the expense and risk of Franchisee and each Owner, Franchisor may elect to assume (but is not obligated to undertake) the defense and/or settlement of any action, lawsuit, proceeding, claim, or demand. Such an election by Franchisor to assume its defense shall not diminish the obligation of Franchisee and each Owner to indemnify, defend and hold harmless Franchisor. 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.
Source: Item 23 — RECEIPTS (FDD pages 59–293)
What This Means (2024 FDD)
According to the 2024 C3 Wellness Spa Franchise Disclosure Document, the franchisee's indemnification obligations do survive the termination, expiration, or transfer of the franchise agreement. Franchisees and each owner must indemnify, defend, and hold harmless C3 Wellness Spa, its affiliates, and their respective officers, directors, shareholders, members, owners, partners, agents, representatives, independent contractors, employees, assigns, and successors from all losses, expenses, claims, causes of action, lawsuits, liabilities, taxes, costs, demands, proceedings, investigations, hearings, and/or damages arising out of, or relating to, the franchisee's Spa Facility, Spa Location, and/or the Franchised Business.
This indemnification extends to costs, fees, and expenses of defending any claim, including reasonable accountant fees, attorney fees, expert witness fees, court costs, deposition fees, travel expenses, and other litigation expenses. C3 Wellness Spa may elect to assume the defense and/or settlement of any action, but this does not diminish the franchisee's obligation to indemnify, defend, and hold harmless C3 Wellness Spa.
This means that even after the franchise agreement ends, whether through termination, expiration, or transfer, the franchisee remains responsible for covering any losses, expenses, or damages that C3 Wellness Spa incurs due to the franchisee's operation of the business, unless such loss is solely due to C3 Wellness Spa's gross negligence. This continuing obligation is a significant consideration for prospective franchisees, as it extends their potential liability beyond the active term of the franchise agreement.