Does the Gold Star franchise agreement's indemnification provision survive termination of the agreement?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 19.3 Indemnification. FRANCHISEE shall indemnify and hold harmless (and at the option of the COMPANY defend) the COMPANY, its officers, directors, employees, agents, affiliates, successors and assigns, from and against any and all claims, demands, losses, obligations, judgments, settlements, penalties, damages, liabilities, costs or expenses (including but not limited to court costs and reasonable attorneys' fees) of any kind whatsoever (including expenses of investigation, defense, prosecution or settlement) directly or indirectly based upon, arising out of, or in any way related to (a) the construction, operation or condition of any part of the Business or the Store, (b) the conduct of business thereat (whether or not such business is conducted in compliance with the provisions of this Agreement), (c) the ownership or possession of real or personal property by FRANCHISEE or (d) any act or omission of any kind of FRANCHISEE or any of its agents, employees, contractors, invitees or representatives. FRANCHISEE's indemnity obligations shall exclude only any liability of an indemnified party which is determined by a court of competent jurisdiction to have resulted solely and directly from the gross negligence or willful misconduct of such indemnified party. This provision will survive any termination or expiration of this Agreement.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star Franchise Disclosure Document, the franchisee's obligation to indemnify Gold Star survives the termination or expiration of the franchise agreement. This means that even after the franchise agreement ends, the franchisee remains responsible for covering certain claims, demands, losses, and expenses related to the operation of the Gold Star business.
The indemnification clause requires the franchisee to protect Gold Star, its officers, directors, employees, agents, affiliates, successors, and assigns from any claims, demands, losses, obligations, judgments, settlements, penalties, damages, liabilities, costs, or expenses. These can include court costs and reasonable attorneys' fees, arising directly or indirectly from the construction, operation, or condition of the business, the conduct of business, ownership or possession of property, or any act or omission by the franchisee or their representatives.
However, the franchisee's indemnification obligations do not extend to liability resulting solely and directly from the gross negligence or willful misconduct of Gold Star itself. The survival of this clause means that even after the franchise ends, Gold Star can seek indemnification from the former franchisee for issues that arose during the franchise term, potentially leading to long-term financial exposure for the franchisee.