Does the definition of 'losses and expenses' for Crave franchisees under Article 15 include compensation for damages to the franchisee's reputation and goodwill?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
As used in this Article 15, the phrase "losses and expenses" shall include, without limitation, all losses, compensatory, exemplary or punitive damages, fines, charges, costs, expenses, lost profits, reasonable attorneys' fees, court costs, settlement amounts, judgments, compensation for damages to our reputation and goodwill, costs of or resulting from delays, financing, costs of advertising material and media time/space, and costs of changing, substituting or replacing the same, and any and all expenses of recall, refunds, compensation, public notices and other such amounts incurred in connection with the matters described.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, Article 15.4 addresses 'Losses and Expenses' and specifies what these entail for the franchisee. The definition explicitly includes 'compensation for damages to our reputation and goodwill' as part of the losses and expenses chargeable to the franchisee. This means that if Crave incurs losses or expenses due to the franchisee's actions, the franchisee may be responsible for compensating Crave for damages to its reputation and goodwill, in addition to other costs.
This provision places a significant financial responsibility on Crave franchisees. If the franchisee's actions lead to negative publicity or harm to the brand's image, the franchisee could be liable for substantial compensation. This could include costs associated with repairing the brand's reputation, such as advertising and public relations efforts.
The FDD also states in Article 15.5 that Crave is not required to seek recovery from third parties or mitigate their losses before making a claim against the franchisee. This means Crave can immediately pursue the franchisee for losses and expenses without first attempting to recover damages from other sources. Franchisees should be aware of the potential financial implications of this clause and take steps to protect the brand's reputation and goodwill in their operations.
Article 15.6 further clarifies that the terms of Article 15 survive the termination, expiration, or transfer of the Franchise Agreement. This means that even after the franchise relationship ends, the franchisee may still be liable for losses and expenses incurred by Crave due to actions taken during the term of the agreement. This long-term liability underscores the importance of understanding and adhering to the terms of the Franchise Agreement and maintaining a high standard of operation to avoid potential damage to Crave's reputation and goodwill.