Are the owners of equity interest in the Franchisee jointly and severally liable for indemnification under the Canine Dimensions franchise agreement?
Canine_Dimensions Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee and each of the owners of any equity interest in Franchisee (the "Owners"), jointly and severally, will indemnify and defend Canine Dimensions Franchising, LLC (the "Indemnified Parties") against all Losses and Expenses arising from the operation or condition of any part of the Franchised Business or its site, the conduct of business, and any acts or omissions of Franchisee or its employees, agents, or contractors, including the collection or use of Customer Information; the infringement or alleged infringement by Franchisee or any Owners of any patent, trademark, copyright, or other proprietary right owned by third parties, unless arising from authorized use of the Marks in compliance with this Agreement; the violation or breach by Franchisee or any Owners of any applicable laws; Franchisee's failure to obtain and maintain required insurance coverage; libel, slander, or defamation of the Indemnified Parties, the System, or any other Franchisee by Franchisee or any Owners; the violation or breach by Franchisee or its Affiliates or Owners of any warranty, representation, agreement, or obligation in this Agreement or other agreements with the Indemnified Parties; acts, errors, or omissions of Franchisee, its Affiliates, Owners, and their respective owners, officers, employees, agents, and representatives in connection with the Franchised Business; any encumbrances, liens, assessments, levies, charges, demands for payment, taxes, or other liabilities imposed on Franchisor due to payments under this Agreement; and any claim that Franchisor and Franchisee are joint employers of Franchisee's employees or personnel.
Source: Item 22 — CONTRACTS (FDD page 36)
What This Means (2025 FDD)
According to Canine Dimensions' 2025 Franchise Disclosure Document, the franchisee and each of the owners of any equity interest in the franchisee are jointly and severally liable for indemnifying Canine Dimensions Franchising, LLC. This means that Canine Dimensions can seek indemnification (protection against losses or expenses) from the franchisee, the owners, or both, for various liabilities and expenses. Each party is fully responsible for the entire obligation, not just a portion.
The FDD specifies that the franchisee and owners will indemnify and defend Canine Dimensions against all losses and expenses arising from the operation or condition of the franchised business, the conduct of business, and any acts or omissions of the franchisee or its employees, agents, or contractors. This includes issues like the collection or use of customer information, infringement of intellectual property rights, violations of laws, failure to maintain insurance, defamation, breach of agreements, and claims related to the franchisor and franchisee being considered joint employers.
This arrangement means that if the Canine Dimensions franchise incurs a significant liability, such as a lawsuit, Canine Dimensions can pursue the franchisee and/or the owners of the equity interest for the full amount of the losses and expenses. The 'joint and several' liability clause is a significant point for potential franchisees and their equity owners to consider, as it exposes them to potentially large financial risks based on the actions of the franchise operation.
Furthermore, the franchisee and owners must provide immediate notice of any action subject to indemnification. Canine Dimensions has the right to control the defense or settlement of any such action without reducing the franchisee's obligation to indemnify them. All losses and expenses incurred will be charged to and paid by the franchisee or owners, regardless of any action or defense undertaken by Canine Dimensions. This underscores the importance of understanding and managing risks associated with the Canine Dimensions franchise.