Does the indemnification obligation to HealthSource Chiropractic cover agreements the Licensed Provider makes to third parties that are not expressly authorized under the agreement?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.1 Licensed Provider agrees to defend, indemnify and hold harmless Management Company, HealthSource and their respective owners, directors, officers, employees, agents, successors, and assigns (each a "Management Indemnified Party"), from and against any and all claims, lawsuits, demands, actions, causes of action or other events, and for all costs and expenses incurred by the Management Indemnified Party in connection therewith, including without limitation actual and consequential damages, reasonable attorneys', accountants', and/or expert witness fees, cost of investigation and proof of facts court costs, other litigation expenses, and travel and living expenses, to the extent caused by, relating to or otherwise arising out of (1) the effects, outcomes and consequences of Licensed Provider's acts and omissions and the acts and omissions of Licensed Provider's employees, representatives and agents in connection with or relating to the provision of the Licensed Provider Services or the operation of the Clinic, (2) any agreements, representations, or warranties Licensed Provider makes to third parties that are not expressly authorized under this Agreement, (3) any damages to any person or property directly or indirectly arising out of the performance of the Licensed Provider Services or the operation of the Clinic, whether or not caused by Licensed Provider's negligent or willful action or failure to act or acts or omissions deemed to be professional malpractice, and/or (4) Licensed Provider's breach of any provision of this Agreement. HealthSource shall be deemed to be a third party beneficiary of all of the covenants contained in this Section 11.1.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to HealthSource Chiropractic's 2025 Franchise Disclosure Document, the Licensed Provider's indemnification obligations extend to agreements, representations, or warranties made to third parties that are not expressly authorized under the franchise agreement. This means that if a franchisee enters into an agreement with a third party that goes beyond the scope of what is permitted in the franchise agreement, the franchisee is responsible for defending and protecting HealthSource Chiropractic from any claims, lawsuits, or expenses that arise as a result.
This indemnification includes all costs and expenses incurred by HealthSource Chiropractic, including actual and consequential damages, reasonable attorneys', accountants', and/or expert witness fees, cost of investigation and proof of facts, court costs, other litigation expenses, and travel and living expenses. The franchisee is essentially acting as a guarantor for any unauthorized agreements they make.
This provision is significant because it places a considerable burden on the franchisee to ensure they fully understand the scope of their authorized activities. It also means that franchisees need to be very careful when dealing with third parties, as any misrepresentation or unauthorized agreement could lead to significant financial liabilities. Franchisees should seek legal counsel to fully understand the implications of this clause and to ensure they do not inadvertently enter into agreements that are not expressly authorized.