Does the City Wide franchisee's obligation to indemnify City Wide survive the termination of the franchise agreement?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
15.1 Termination of this Agreement will not relieve Franchisee of any right, duty, covenant, or obligation relating to the use of the Marks, the Software, the confidentiality and use of the Confidential Information, the maintenance of statements and records and inspection and auditing of records, covenants relating to non-competition, and other Franchisee covenants, Franchisee's post-term obligations, indemnification, and independent contractor status, the availability of equitable relief and payment of costs and expenses, governing law and dispute resolution, severability and construction, and acknowledgments under the Franchise Agreement or any other Agreement.
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 the 2025 City Wide Franchise Disclosure Document, the franchisee's obligation to indemnify City Wide does indeed survive the termination of the franchise agreement. Specifically, Section 15.1 of the franchise agreement states that the termination of the agreement will not relieve the franchisee of several obligations, including indemnification. This means that even after the franchise agreement ends, the franchisee may still be responsible for covering certain losses, costs, expenses, damages, and liabilities related to the operation of the franchised business.
This survival of obligations is further reinforced in Section 19.3, which explicitly states that the franchisee will defend and indemnify City Wide against various losses, costs, and expenses resulting from the operation of the franchised business. This includes, but is not limited to, issues arising from the use, condition, or construction of the business, the sale of services, and violations of privacy laws. The FDD clearly states that "All such indemnification will survive termination of this Agreement."
For a prospective City Wide franchisee, this means that potential liabilities related to the business could extend beyond the term of the franchise agreement. It is crucial to understand the scope of these indemnification obligations and to assess the potential risks associated with the business. Franchisees should carefully review the specific terms of the franchise agreement and seek legal counsel to fully understand their responsibilities and potential liabilities, even after the agreement is terminated.