Does the Fat Shack franchisee's obligation to indemnify continue after the franchise agreement expires or terminates?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees to indemnify, defend and hold harmless FSI, its subsidiaries and affiliates, and their respective shareholders, directors, members, managers, officers, managers, members, employees, agents, successors and assigns (the "Indemnified Parties") against, and to reimburse them for all claims, obligations and damages described in this Section 20.3, any and all third party obligations described in Section 20.2, any amounts that FSI spends curing any default of Franchisee under this Agreement or any third party agreement if FSI, in its sole discretion, elects to cure such default, and any and all claims and liabilities directly or indirectly arising out of the operation of the FAT SHACK Restaurant, the use of the Marks and Licensed Methods in any manner, or the violation of any laws including labor and employment laws in the FAT SHACK Restaurant, unless (and then only to the extent) caused by the Indemnified Party's negligence. This indemnity includes any claims arising from the acts or omissions of Franchisee's Authorized Representatives. For purposes of this indemnification, "claims" shall mean and include all obligations, actual and consequential damages and costs reasonably incurred in the defense of any claim against the Indemnified Parties, including, without limitation, reasonable accountants', attorneys' and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and travel and living expenses. Each Indemnified Party shall have the right to defend any such claim against it at Franchisee's expense and agree to settlements or any other actions. This indemnity shall continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the franchisee's obligation to indemnify Fat Shack continues even after the franchise agreement expires or terminates. This means that even after the agreement ends, the franchisee remains responsible for covering certain claims, obligations, and damages.
Specifically, the franchisee must indemnify, defend, and hold harmless Fat Shack and its related parties against any claims, obligations, and damages arising from the operation of the Fat Shack restaurant, the use of its marks and methods, or any violation of laws. This includes third-party obligations, costs Fat Shack incurs to cure any default of the franchisee, and any liabilities resulting from the restaurant's operation. The definition of "claims" is broad, encompassing all obligations, actual and consequential damages, and costs related to defending against any claim, including legal fees and investigation expenses.
This obligation extends beyond the term of the agreement, meaning that if a claim arises from the franchisee's actions during the franchise term, the franchisee is still responsible for covering it even after the franchise agreement has ended. This continued indemnity is a significant responsibility for the franchisee, as it could involve substantial costs depending on the nature and extent of any claims that may arise.