Does the City Wide franchisee's indemnification obligation survive the termination of the franchise agreement?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- 19.3 Franchisee will defend at Franchisee's own cost and indemnify and hold harmless CITY WIDE, its general partners (if ever any) and their shareholders, directors, officers, employees and agents, from and against any and all loss, costs, expenses (including, without limitation, reasonable accountants', attorneys' and expert witness fees, costs of investigation and proof of facts, court costs and other litigation expenses and travel and living expenses), damages and liabilities, however caused, resulting directly or indirectly from or pertaining to the use, condition, or construction, equipping, decorating, maintenance or operation of the Franchised Business, including the sale of any service sold from the Franchised Business and violation of Privacy Laws. Such loss, claims, costs, expenses, damages and liabilities will include, without limitation, those arising from latent or other defects in the Franchised Business, whether or not discoverable by CITY WIDE, and those arising from the death or injury to any person or arising from damage to the property of Franchisee or CITY WIDE, their respective agents or employees, or any third person, firm or corporation, whether or not such losses, claims, costs, expenses, damages, or liabilities were actually or allegedly caused wholly or in part through the negligence of CITY WIDE or any of its agents or employees or resulted from any strict liability imposed on CITY WIDE or any of its agents or employees. All such indemnification will survive termination of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the franchisee's obligation to indemnify City Wide does indeed survive the termination of the franchise agreement. Specifically, the franchisee must defend and indemnify City Wide against losses, costs, expenses, damages, and liabilities resulting from the operation of the franchised business. This includes issues related to the condition, construction, equipping, maintenance, or operation of the business, as well as the sale of services and violation of privacy laws.
This indemnification extends to losses arising from latent defects, injuries, or damages to property, regardless of whether such issues were caused by the negligence of City Wide or its agents. This means that even if City Wide's actions contribute to a loss, the franchisee may still be responsible for covering the associated costs. This obligation continues even after the franchise agreement is terminated.
For a prospective City Wide franchisee, this signifies a long-term financial responsibility. Even after the franchise is no longer operating, the franchisee could still be liable for costs associated with past operations. It is crucial for franchisees to understand the scope of this indemnification and to ensure they have adequate insurance coverage to protect themselves against potential claims. Franchisees should consult with a legal and financial advisor to fully understand the implications of this clause.