Under Eos Worldwide's 'Step-In Rights', what liability protection is provided to Eos Worldwide and its designees?
Eos_Worldwide Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition, in order to prevent an interruption of the Franchise which would cause harm to the EOS Franchise System and thereby lessen its value, you authorize us to operate your Franchise for as long as we deem necessary and practical, which may include designating another Implementer to provide Implementer Services on your or our behalf, and without waiver of any other rights or remedies which we may have under this Agreement ("Step-In Rights").
In the event of the exercise of the Step-In Rights by us, you agree to hold harmless us, our designees, and our representatives for all actions occurring during the course of such temporary operation except to the extent that you incur losses due to our gross negligence or willful misconduct.
You agree to pay all of our reasonable fees and costs incurred as a consequence of our exercise of our Step-In Rights including wages and personnel costs which are payable on demand out of Franchised Business proceeds.
Operation of the Franchise during any such period will be on your behalf; provided, that we only have a duty to utilize commercially reasonable efforts and we will not be liable to you for any debts, losses or obligations incurred by the Franchise or to any of your creditors for any products, materials, supplies or services the Franchise purchases during any period it is managed by our appointed manager.
Source: Item 23 — RECEIPTS (FDD pages 74–246)
What This Means (2025 FDD)
According to the 2025 FDD, Eos Worldwide's franchise agreement includes 'Step-In Rights,' which allow them to operate a franchisee's business under certain circumstances. Specifically, if Eos Worldwide determines that the operation of a franchise is in jeopardy or if the franchisee is in default of the agreement, Eos Worldwide can step in to operate the franchise. This can include designating another implementer to provide services on their or the franchisee's behalf.
In the event that Eos Worldwide exercises these Step-In Rights, the franchisee agrees to hold harmless Eos Worldwide, its designees, and its representatives for all actions occurring during this temporary operation. However, this protection does not extend to losses incurred due to Eos Worldwide's gross negligence or willful misconduct. This means that while Eos Worldwide is managing the franchise, they are protected from liability unless their actions are proven to be grossly negligent or intentionally harmful.
Furthermore, the operation of the franchise during this period is considered to be on behalf of the franchisee. Eos Worldwide only has a duty to utilize commercially reasonable efforts in managing the business and will not be liable for any debts, losses, or obligations incurred by the franchise, or to any of the franchisee's creditors for any products, materials, supplies, or services purchased during the period it is managed by Eos Worldwide's appointed manager. This clarifies that Eos Worldwide is acting as a temporary manager to maintain the franchise's operation, but the franchisee ultimately bears the financial responsibility, except in cases of gross negligence or willful misconduct by Eos Worldwide.