Does the Gold Star franchisee's obligation to indemnify the company survive the termination or expiration of the franchise 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 Gold Star's 2025 Franchise Disclosure Document, the franchisee's obligation to indemnify the company does indeed survive the termination or expiration of the franchise agreement. Specifically, the franchisee must indemnify and hold harmless Gold Star, its officers, directors, employees, agents, affiliates, successors, and assigns. This means the franchisee is responsible for protecting Gold Star from any claims, demands, losses, obligations, judgments, settlements, penalties, damages, liabilities, costs, or expenses, including legal fees, related to the franchise operation.
This indemnification covers a broad range of issues, including those arising from the construction, operation, or condition of the business, the conduct of business, ownership or possession of property, and any actions or omissions by the franchisee or their representatives. The only exception is liability resulting directly from the gross negligence or willful misconduct of Gold Star itself.
This survival clause means that even after the franchise agreement ends, whether through termination or expiration, the franchisee remains responsible for any liabilities that arose during the term of the agreement. This is a standard practice in franchising, designed to protect the franchisor from long-tail liabilities that may surface after the franchisee has ceased operating the business. Prospective franchisees should carefully consider this obligation and ensure they maintain adequate insurance coverage to address potential claims.