Does the indemnity obligation of a Crave Cookies franchisee continue after the franchise agreement ends?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.1 Indemnity. Franchisee shall indemnify and defend (with counsel reasonably acceptable to Crave Cookies Franchising) Crave Cookies Franchising, its parent entities, subsidiaries and affiliates, and their respective owners, directors, officers, employees, agents, successors and assignees (collectively, "Indemnitees") against all Losses in any Action by or against Crave Cookies Franchising and/or any Indemnitee directly or indirectly related to, or alleged to arise out of, the operation of the Business. Notwithstanding the foregoing, Franchisee shall not be obligated to indemnify an Indemnitee from Actions arising as a result of any Indemnitee's intentional misconduct or negligence. Any delay or failure by an Indemnitee to notify Franchisee of an Action shall not relieve Franchisee of its indemnity obligation except to the extent (if any) that such delay or failure materially prejudices Franchisee. Franchisee shall not settle an Action without the consent of the Indemnitee. This indemnity will continue in effect after this Agreement ends.
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies's 2025 Franchise Disclosure Document, the franchisee's obligation to indemnify Crave Cookies continues even after the franchise agreement has ended. Specifically, the franchisee must indemnify and defend Crave Cookies Franchising against losses related to the operation of the business. This includes covering legal costs and damages resulting from actions against Crave Cookies.
This means that even after a Crave Cookies franchise is sold, closed, or the agreement expires, the former franchisee may still be responsible for covering costs associated with incidents that occurred during their time operating the business. This obligation extends to Crave Cookies Franchising, its parent entities, subsidiaries, affiliates, and their respective owners, directors, officers, employees, agents, successors, and assignees.
However, the franchisee is not required to indemnify Crave Cookies for actions arising from the Indemnitee's intentional misconduct or negligence. Additionally, any delay or failure by Crave Cookies to notify the franchisee of an action does not relieve the franchisee of their indemnity obligation, except if the delay materially prejudices the franchisee. The franchisee cannot settle an action without the Indemnitee's consent.
This extended liability is a significant consideration for prospective Crave Cookies franchisees. It highlights the importance of maintaining thorough records, adhering to all operational standards, and securing adequate insurance coverage to mitigate potential risks during the franchise term and beyond.