After the termination or expiration of the Chatime agreement, are parties released from obligations that expressly survive the agreement?

According to Chatime's 2025 Franchise Disclosure Document, the franchisor's rights at law and under the agreement, including the right to be indemnified, are not affected by the termination of the franchise agreement. Specifically, the obligations that survive termination include the franchisee's duty to indemnify Chatime against losses, liabilities, legal costs, and expenses resulting from breaches of the agreement, injuries or property loss on the premises, franchisee's taxes, and negligent acts or omissions. This means that even after the franchise agreement ends, a franchisee may still be responsible for certain financial and legal obligations to Chatime.

This condition is significant for prospective franchisees because it extends their potential liability beyond the active term of the franchise agreement. For example, if a customer injury occurs at the Chatime location due to franchisee negligence shortly before the agreement terminates, the franchisee could still be liable for resulting costs even after the agreement's expiration. Similarly, any legal costs Chatime incurs due to a franchisee's breach of contract can be pursued even post-termination.

Franchisees should carefully review the indemnity clause and understand the types of events that could trigger these continuing obligations. It is also important to maintain adequate insurance coverage throughout the term of the agreement and to seek legal advice regarding potential liabilities upon termination or expiration. This provision is not uncommon in franchise agreements, as franchisors seek to protect themselves from liabilities arising from the franchisee's actions, even after the formal business relationship has ended.