Is the Devon Creek Franchisee required to reimburse the Franchisor for any debts related to the Agreement?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
to recover under such policies on any loss caused by Franchisee or Franchisee's servants, agents or employees.
- 15.6 Indemnification. 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
TO HOLD THE DEVON CREEK INDEMNITEES HARMLESS, FRANCHSEE WILL REIMBURSE THE DEVON CREEK INDEMNITEES AS THE COSTS AND EXPENSES ARE INCURRED BY THE DEVON CREEK INDEMNITEES.
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16. TRANSFERS
16.1 Transfers by Franchisor.
- 16.1.1 Franchisor shall have the right to assign this Agreement, and all of Franchisor's rights and privileges hereunder, to any person, firm, corporation or other entity, without Franchisee's permission or prior knowledge, provided that, with respect to any assignment resulting in the subsequent performance by the assignee of Franchisor's obligations, the assignee shall expressly assume and agree to perform Franchisor's obligations hereunder. Specifically, and without limitation to the foregoing, Franchisee expressly affirms and agrees that Franchisor may: (i) sell Franchisor's assets and Franchisor's rights to the Marks and the System outright to a third party; (ii) engage in a public or private placement of some or all of Franchisor's securities; (iii) merge, acquire other corporations, or be acquired by another corporation, including competitors; (iv) undertake a refinancing, recapitalization, leveraged buy-out or other economic or financial restructuring; and (v) with regard to any or all of the above sales, assignments and dispositions, Franchisee expressly and specifically waives any claims, demands or damages arising from or relating to the loss of association with or identification of Franchisor.
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, franchisees may be required to reimburse Devon Creek in certain situations. Specifically, franchisees must indemnify Devon Creek Indemnitees from claims related to the operation of the franchise, the franchised business, services, products, the business office location, or any aspect of the real estate connected to the franchised business. This includes responsibility for issues caused by the franchisee, their agents, or employees, or arising from the franchisee's advertising or business practices. Franchisees are responsible for covering all losses and expenses, including attorney's fees, incurred in connection with any action, suit, or proceeding related to this indemnification.
Additionally, if a franchisee fails to resolve a customer dispute, Devon Creek has the option to step in and issue a refund to the customer on the franchisee's behalf to protect the goodwill and reputation of the Devon Creek system. In such cases, the franchisee is obligated to reimburse Devon Creek for the refunded amount within ten days of receiving notice. Devon Creek is authorized to take payment for these refunds through electronic funds transfer or ACH payment.
These reimbursement requirements mean that a Devon Creek franchisee could face unexpected expenses if they are found liable for claims related to their business operations or if Devon Creek intervenes to resolve customer disputes. It is important for prospective franchisees to understand the scope of the indemnification and customer dispute resolution clauses to assess the potential financial risks associated with operating a Devon Creek franchise.