Does the Desi District franchisee's obligation to indemnify continue after the franchise agreement ends?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
- 16.1 Indemnity. Franchisee shall indemnify and defend (with counsel reasonably acceptable to Desi District Franchise Group) Desi District Franchise Group, 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 Desi District Franchise Group 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 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, the franchisee's obligation to indemnify Desi District continues even after the franchise agreement ends. Specifically, Article 16.1 of the franchise agreement states that the franchisee's indemnity obligations will remain in effect after the agreement terminates.
This means that even after the franchise agreement expires or is terminated, a Desi District franchisee may still be responsible for covering losses resulting from actions related to the operation of the business. This includes legal defense costs and any damages awarded in lawsuits. However, the franchisee is not required to indemnify Desi District for actions arising from the franchisor's intentional misconduct or negligence.
It is important for prospective Desi District franchisees to understand that this indemnification clause extends beyond the term of the agreement. Franchisees should carefully consider the potential long-term financial implications of this obligation and consult with legal counsel to fully understand their responsibilities.