Does the indemnity obligation of a Crown Gold Exchange franchisee continue after the franchise agreement ends?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
.** Franchisee shall not grant a security interest in this Agreement to any person or entity. If Franchisee grants an "all assets" security interest to any lender or other secured party, Franchisee shall cause the secured party to expressly exempt this Agreement from the security interest.
ARTICLE 16. INDEMNITY
16.1 Indemnity. Franchisee shall indemnify and defend (with counsel reasonably acceptable to Crown Gold Franchising) Crown Gold 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 Crown Gold 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 pages 38–39)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, the franchisee's obligation to indemnify Crown Gold Exchange continues even after the franchise agreement ends. Specifically, the franchisee must indemnify Crown Gold Exchange against losses related to the operation of the business. This means that even after the franchise agreement is terminated or expires, the franchisee could still be responsible for covering costs and damages resulting from lawsuits or other actions related to their past operation of the Crown Gold Exchange business.
This obligation extends to Crown Gold Exchange, its parent entities, subsidiaries, affiliates, and their respective owners, directors, officers, employees, agents, successors, and assignees. However, the franchisee is not required to indemnify these parties from actions arising from their intentional misconduct or negligence. Any delay or failure by Crown Gold Exchange to notify the franchisee of an action does not relieve the franchisee of their indemnity obligation unless the delay materially prejudices the franchisee.
Furthermore, upon termination or expiration of the Franchise Agreement, all obligations that by their terms or by reasonable implication survive termination, including those pertaining to indemnity, will remain in effect. This reinforces the ongoing nature of the indemnity obligation, even after the formal business relationship concludes. Franchisees should be aware that this long-term liability could have significant financial implications, as they may be required to cover legal costs and damages long after they have ceased operating the Crown Gold Exchange business.