Does the Hydrodog franchisee's indemnification obligation continue after the termination of the Franchise Agreement?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
- 18.4 Indemnification. You agree to indemnify, defend and hold harmless us, our affiliates, our parents, and our and our affiliates' and parents' respective shareholders, directors, officers, employees, agents, successors and assignees (the "Indemnified Party(ies)") against and to reimburse any one or more of the Indemnified Parties for all claims, obligations and damages described in this Section, any and all taxes described in this Agreement and any and all claims and liabilities directly or indirectly arising out of your HydroDog Business's operation (even if our negligence is alleged, but not proven) or your breach of this Agreement. For purposes of this indemnification, "claims" includes all obligations, damages (actual, consequential or otherwise) and costs reasonably incurred in the defense of any claim against any of the Indemnified Parties, including, without limitation, reasonable accountants', arbitrators', attorneys', paralegals' and expert witness fees, costs of investigation and proof of facts, court costs, other expenses of litigation, arbitration or alternative dispute resolution and travel and living expenses. We have the right to defend any such claim against us. This indemnity will continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement. Under no circumstances will we or any other Indemnified Party be required to seek recovery from any insurer or other third party, or otherwise to mitigate our, their or your losses and expenses, in order to maintain and recover fully a claim against you. You agree that a failure to pursue such recovery or mitigate a loss will in no way reduce or alter the amounts we or another Indemnified Party may recover from you.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, the franchisee's obligation to indemnify the franchisor continues even after the termination or expiration of the Franchise Agreement. This means that even after the agreement ends, a Hydrodog franchisee remains responsible for covering certain claims, obligations, and damages.
The indemnification clause requires the franchisee to defend and hold harmless Hydrodog and its related parties from any claims, taxes, and liabilities arising from the operation of the Hydrodog business or any breach of the Franchise Agreement. This includes covering all obligations, actual or consequential damages, and costs related to defending against any claim, including legal fees and investigation expenses. The franchisee is responsible for these costs even if Hydrodog's negligence is alleged but not proven.
This ongoing indemnification obligation has significant implications for a prospective Hydrodog franchisee. Even after ceasing operations, the former franchisee could still be financially liable for issues that arose during the term of the franchise. Hydrodog is not obligated to seek recovery from any insurer or mitigate losses, meaning they can pursue the former franchisee directly for full compensation. Therefore, it is crucial for franchisees to understand the scope of this indemnification and maintain appropriate insurance coverage throughout their operation and potentially after the franchise agreement ends.