Does the Embassy Suites franchisee's obligation to indemnify the Indemnified Parties survive the expiration or termination of the franchise agreement?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
14.1.8 any inquiry, investigation, suit, action, or proceeding arising out of or in connection with any fees or costs charged to patrons or guests by you, and if you acquired the Hotel in a Change of Ownership Transfer, by the previous owner (your transferor) before you acquired ownership of the Hotel.
14.2 You do not have to indemnify an Indemnified Party to the extent damages otherwise covered under this Section 14 are adjudged by a final, non-appealable judgment of a court of competent jurisdiction to have been solely the result of the gross negligence or willful misconduct of that Indemnified Party, and not any of the acts, errors, omissions, negligence or misconduct of you or anyone related to you or the Hotel.
You may not rely on this exception to your indemnity obligation if the claims were asserted against us or any other Indemnified Party on the basis of theories of imputed or secondary liability, such as vicarious liability, agency, or apparent agency, or our failure to compel you to comply with the provisions of this Agreement, including compliance with Standards, Laws or other requirements.
Source: Item 22 — CONTRACTS (FDD page 97)
What This Means (2025 FDD)
Based on the 2025 Embassy Suites Franchise Disclosure Document, the franchisee's obligation to indemnify the Indemnified Parties does survive the expiration or termination of the franchise agreement. According to item 22, subsection 14.1.8, the franchisee is obligated to indemnify the Indemnified Parties for any inquiry, investigation, suit, action, or proceeding arising out of or in connection with any fees or costs charged to patrons or guests, even those charged by a previous owner if the franchisee acquired the hotel in a Change of Ownership Transfer. This obligation extends to actions by the previous owner before the franchisee acquired the hotel.
This means that even after the franchise agreement ends, whether through expiration or termination, the franchisee remains responsible for covering costs and damages related to specific incidents that occurred during their operation of the Embassy Suites hotel. This includes legal and financial liabilities stemming from disputes over fees or costs charged to guests.
However, the franchisee does not have to indemnify an Indemnified Party if a court determines that damages were solely the result of the gross negligence or willful misconduct of that Indemnified Party. This exception does not apply if claims were asserted against the Indemnified Parties on the basis of theories of imputed or secondary liability, such as vicarious liability, agency, or apparent agency, or failure to compel compliance with the agreement.