If Circle K seeks injunctive relief against a franchisee, who is responsible for indemnifying the franchisor's costs?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor will be entitled to seek the entry of temporary and permanent injunctions and orders of specific performance enforcing the provisions of this Agreement relating to: (A) the Marks and the Business System; (B) the obligations of Franchisee upon termination or expiration of this Agreement; (C) the assignment of this Agreement, the Franchised Business, and ownership interests in Franchisee; (D) the covenants not to compete; (E) confidentiality; or (F) any act or omission by Franchisee, the Store or employees of the Store that (i) constitutes a violation of any applicable law, ordinance or regulation, (ii) is dishonest or misleading to customers or prospective customers of the Store or other Circle K Stores, (iii) constitutes a danger to employees or customers of the Store or to the public, or (iv) may impair the goodwill associated with the Marks and the Business System. Franchisee will indemnify Franchisor for all costs that it incurs in any such proceedings including, without limitation, reasonable attorneys' fees, expert witness fees, costs of investigation, Court costs, accounting fees, travel and living expenses, and all other costs incurred by Franchisor. Franchisor will be entitled to seek injunctive relief against Franchisee without the posting of any bond or security, unless required by applicable law.
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the franchisee is responsible for indemnifying Circle K for all costs incurred in proceedings where Circle K seeks injunctive relief against the franchisee. This includes reasonable attorneys' fees, expert witness fees, costs of investigation, court costs, accounting fees, travel and living expenses, and all other costs incurred by Circle K.
This means that if Circle K pursues legal action to enforce the franchise agreement through an injunction, the franchisee could be liable for Circle K's legal and related expenses, in addition to any other damages or remedies awarded to Circle K. This indemnification obligation applies regardless of the outcome of the injunctive relief sought by Circle K.
Circle K is also entitled to seek injunctive relief against the franchisee without having to post a bond or security, unless required by applicable law. This could make it easier and less expensive for Circle K to obtain an injunction against a franchisee, further increasing the potential financial burden on the franchisee.
This type of clause is relatively common in franchise agreements, as it aims to protect the franchisor's brand standards, business system, and intellectual property. However, the scope of indemnification can vary, so prospective franchisees should carefully review these provisions and understand the potential financial implications.