Does Devon Creek assume any liabilities when purchasing the franchisee's assets?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
TO THE FULLEST EXTENT PERMITTED BY LAW, FRANCHISEE AGREES TO EXONERATE AND INDEMNIFY AND HOLD HARMLESS DEVON CREEK FRANCHISE GROUP, LLC, LICENSOR, AND ANY PARENT COMPANY, SUBSIDIARIES, DIVISIONS, AFFILIATES, SUCCESSORS, ASSIGNS AND DESIGNEES AS WELL AS THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SHAREHOLDERS, SUCCESSORS, DESIGNEES AND REPRESENTATIVES, (COLLECTIVELY REFERRED TO AS THE "DEVON CREEK INDEMNITEES"), FROM ALL CLAIMS BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATED TO THE OPERATION, CONDITION, OR ANY PART OF FRANCHISEE'S DEVON CREEK FRANCHISE, THE FRANCHISED BUSINESS, THE SERVICES OR PRODUCTS, THE FRANCHISED BUSINESS OFFICE LOCATION, OR ANY ASPECT OF THE REAL ESTATE CONNECTED TO FRANCHISEE'S FRANCHISED BUSINESS, WHETHER CAUSED BY FRANCHISEE, FRANCHISEE'S AGENTS OR EMPLOYEES, OR ARISING FROM FRANCHISEE'S ADVERTISING OR BUSINESS PRACTICES. FRANCHISEE AGREES TO PAY FOR ALL THE DEVON CREEK INDEMNITEES' LOSSES, EXPENSES (INCLUDING, BUT NOT LIMITED TO ATTORNEYS' FEES) OR CONCURRENT OR CONTRIBUTING LIABILITY INCURRED IN CONNECTION WITH ANY ACTION, SUIT, PROCEEDING, INQUIRY (REGARDLESS OF WHETHER THE SAME IS REDUCED TO JUDGMENT OR DETERMINATION), OR ANY SETTLEMENT THEREOF FOR THE INDEMNIFICATION GRANTED BY FRANCHISEE HEREUNDER. THE DEVON CREEK INDEMNITEES SHALL HAVE THE RIGHT TO SELECT AND APPOINT INDEPENDENT COUNSEL TO REPRESENT ANY OF THE DEVON CREEK INDEMNITEES IN ANY ACTION OR PROCEEDING COVERED BY THIS INDEMNITY. FRANCHISEE AGREES THAT
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
Based on the 2024 Devon Creek Franchise Disclosure Document, the franchise agreement does not explicitly state that Devon Creek assumes any liabilities when purchasing a franchisee's assets. However, the document includes clauses about indemnification and dispute resolution that could be relevant in such a situation.
Specifically, the franchisee agrees to indemnify Devon Creek Indemnitees from claims related to the franchise's operation, which suggests the franchisee remains responsible for liabilities. Additionally, Devon Creek has the option to resolve customer disputes and be reimbursed by the franchisee, indicating that the franchisee initially bears the responsibility for customer-related liabilities. The franchisee is responsible for maintaining insurance policies that name Devon Creek as an additional insured, which protects Devon Creek from liabilities arising from the franchisee's operations.
While the FDD outlines the franchisee's responsibilities regarding liabilities and indemnification, it does not detail the specific circumstances under which Devon Creek might purchase a franchisee's assets or whether Devon Creek would assume any liabilities in such a transaction. A prospective franchisee should seek clarification from Devon Creek regarding asset purchases and liability assumptions during the due diligence process.
Therefore, it is important for a prospective franchisee to directly address this question with Devon Creek to fully understand the potential liabilities and responsibilities in the event of an asset purchase by the franchisor.