If Crave exercises its Step-In Rights, am I required to indemnify Crave and its representatives for actions occurring during the temporary operation of my Crave franchise?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
We shall keep in a separate account all monies generated by the operation of your business, less the expenses of the business, including reasonable compensation and expenses for our representatives. If we temporarily operate the Franchised Business on your behalf, you also agree to pay us the then-current fee for the management and maintenance of the Franchised Business in your absence. In the event of our exercise of the Step-In Rights**,** you agree to hold harmless us and our representatives for all actions occurring during the course of such temporary operation. You agree to pay all of our reasonable attorneys' fees and costs incurred as a consequence of our exercise of the Step-In Rights. Nothing contained herein shall prevent us from exercising any other right which we may have under this Agreement, including, without limitation, termination.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, if Crave exercises its Step-In Rights to temporarily operate your franchise, you are required to hold harmless Crave and its representatives for all actions that occur during this temporary operation. This means you agree to protect Crave from any liability, losses, damages, or expenses arising from their operation of your franchise during that period. You also agree to cover Crave's reasonable attorney's fees and costs if they incur any legal expenses as a result of exercising their Step-In Rights.
This requirement to indemnify Crave is a significant obligation for a franchisee. It means that even though you are not directly managing the business during the period Crave has stepped in, you could still be financially responsible for issues that arise from their operation. This could include things like employee disputes, customer injuries, or regulatory violations.
It is important to note that this obligation exists even though Crave is managing the business and receiving the revenue generated, less expenses and a management fee. The FDD states that Crave will keep all monies generated by the operation of your business in a separate account, less the expenses of the business, including reasonable compensation and expenses for their representatives. You also agree to pay Crave the then-current fee for the management and maintenance of the Franchised Business in your absence.
Prospective franchisees should carefully consider the implications of this indemnification clause and discuss it with a legal advisor. It would be prudent to understand the circumstances under which Crave might exercise its Step-In Rights and what measures are in place to protect the franchisee from potential liabilities during that time. Understanding the scope of this obligation is crucial before entering into a franchise agreement with Crave.