What happens to the franchisee's obligations related to indemnity after the Chocolate Bash franchise agreement is terminated?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
eement); or
- (xiii) Franchisee or any Owner is accused by any governmental authority or third party of any act that in CB Franchising's opinion is reasonably likely to materially and unfavorably affect the Chocolate Bash brand, or is charged with, pleads guilty to, or is convicted of a felony.
- 14.3 Effect of Termination. Upon termination or expiration of this Agreement, all obligations that by their terms or by reasonable implication survive termination, including those pertaining to non-competition, confidentiality, indemnity, and dispute resolution, will remain in effect, and Franchisee must immediately:
- (i) pay all amounts owed to CB Franchising based on the operation of the Business through the effective date of termination or expiration;
- (ii) return to CB Franchising all copies of the Manual, Confidential Information and any and all other materials provided by CB Franchising to Franchisee or created by a third party for Franchisee relating to the operation of the Business, and all items containing any Marks, copyrights, and other proprietary items; and delete all Confidential Information and proprietary materials from electronic devices;
- (iii) notify the telephone, internet, email, electronic network, directory, and listing entities of the termination or expiration of Franchisee's right to use any numbers, addresses, domain names, locators, directories and listings associated with any of the Marks, and authorize their transfer to CB Franchising or any new franchisee as may be directed by CB Franchising, and Franchisee hereby irrevocably appoints CB Franchising, with full power of substitution, as its true and lawful attorney-infact, which appointment is coupled with an interest; to execute such directions and authorizations as may be necessary or appropriate to accomplish the foregoing; and
- (iv) cease doing business under any of the Marks.
- 14.4 Remove Identification. Within 30 days after termination or expiration, Franchisee shall at its own expense "de-identify" the Location so that it no longer contains the Marks, signage, or any trade dress of a Chocolate Bash business, to the reasonable satisfaction of CB Franchising. Franchisee shall comply with any reasonable instructions and procedures of CB Franchising for de-identification. If Franchisee fails to do so within 30 days after this Agreement expires or is terminated, CB Franchising may enter the Location to remove the Marks and de-identify the Location.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, the franchisee's obligation to indemnify Chocolate Bash continues even after the franchise agreement ends. This means that even after the agreement is terminated or expires, the franchisee remains responsible for protecting Chocolate Bash and its related entities from losses resulting from actions related to the operation of the Chocolate Bash business.
The franchisee must indemnify and defend Chocolate Bash against all losses in any action related to the operation of the business. However, the franchisee is not required to indemnify Chocolate Bash from actions arising from Chocolate Bash's intentional misconduct or negligence. Any delay or failure by Chocolate Bash 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 an action without Chocolate Bash's consent.
Chocolate Bash has the option to assume the defense of any action subject to indemnification at the franchisee's expense, which does not diminish the franchisee's obligation to indemnify Chocolate Bash. This extended responsibility is a significant consideration for prospective franchisees, as it means potential liabilities can extend beyond the term of the franchise agreement.