What happens to obligations pertaining to indemnity after the termination of a Fly To Fit franchise agreement?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
14.3 Effect of Termination. Upon termination or expiration of this Agreement, all obligations that by their terms or by reasonable implication survive termination, including those pertaining to non-competition, confidentiality, indemnity, and dispute resolution, will remain in effect, and Franchisee must immediately:
16.1 Indemnity. Franchisee shall indemnify and defend (with counsel reasonably acceptable to Fly To Fit Franchise) Fly To Fit Franchise, its parent entities, subsidiaries and affiliates, and their respective owners, directors, officers, employees, agents, successors and assignees (collectively, "Indemnitees") against all Losses in any Action by or against Fly To Fit Franchise and/or any Indemnitee directly or indirectly related to, or alleged to arise out of, the operation of the Business. Notwithstanding the foregoing, Franchisee shall not be obligated to indemnify an Indemnitee from Actions arising as a result of any Indemnitee's intentional misconduct or negligence. Any delay or failure by an Indemnitee to notify Franchisee of an Action shall not relieve Franchisee of its indemnity obligation except to the extent (if any) that such delay or failure materially prejudices Franchisee. Franchisee shall not settle an Action without the consent of the Indemnitee. This indemnity will continue in effect after this Agreement ends.
16.2 Assumption. An Indemnitee may elect to assume the defense of any Action subject to this indemnification, and control all aspects of defending the Action, including negotiations and settlement, at Franchisee's expense. Such an undertaking shall not diminish Franchisee's obligation to indemnify the Indemnitees.
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, the franchisee's obligation to indemnify Fly To Fit continues even after the franchise agreement ends. Specifically, upon termination or expiration of the agreement, obligations pertaining to indemnity remain in effect. This means that even after the franchise is no longer operating, the franchisee may still be responsible for covering losses related to the business's operation.
The franchisee is required to indemnify and defend Fly To Fit, its parent entities, subsidiaries, affiliates, and their respective owners, directors, officers, employees, agents, successors, and assignees against all losses in any action against Fly To Fit. This indemnification covers issues directly or indirectly related to, or alleged to arise out of, the operation of the Fly To Fit business. However, the franchisee is not obligated to indemnify Fly To Fit for actions arising from Fly To Fit's intentional misconduct or negligence.
It's important to note that any delay or failure by Fly To Fit to notify the franchisee of an action does not relieve the franchisee of their indemnity obligation unless the delay materially prejudices the franchisee. The franchisee cannot settle an action without Fly To Fit's consent. Fly To Fit also has the option to assume the defense of any action and control all aspects of the defense, including negotiations and settlement, at the franchisee's expense, without diminishing the franchisee's obligation to indemnify them.