Under the Hyper Kidz franchise agreement, will Hyper Kidz assume liability for any act or omission of the franchisee?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
THEREOF FOR THE INDEMNIFICATION GRANTED BY FRANCHISEE HEREUNDER. THE HYPER KIDZ INDEMNITEES SHALL HAVE THE RIGHT TO SELECT AND APPOINT INDEPENDENT COUNSEL TO REPRESENT ANY OF THE HYPER KIDZ INDEMNITEES IN ANY ACTION OR PROCEEDING COVERED BY THIS INDEMNITY. FRANCHISEE AGREES THAT TO HOLD THE HYPER KIDZ INDEMNITEES HARMLESS, FRANCHISEE WILL REIMBURSE THE HYPER KIDZ INDEMNITEES AS THE COSTS AND EXPENSES ARE INCURRED BY THE HYPER KIDZ INDEMNITEES.
_____ Initial
15.7 You Are Not Authorized
You understand and agree that nothing in this Agreement authorizes you or any of the Principals to make any contract, agreement, warranty or representation on our behalf, or to incur any debt or other obligation in our name or the Marks, and that we shall in no event assume liability for, or be deemed liable under this Agreement as a result of, any such action, or for any act or omission of you or any of the Principals or any claim or judgment arising therefrom.
ARTICLE 16: TRANSFER
16.1 Transfer by Us
We shall have the right to assign this Agreement and all of our attendant rights and privileges to any person, firm, corporation or other entity provided that, with respect to any assignment resulting in the subsequent performance by the assignee of our functions: (i) the assignee shall, at the time of such assignment, be financially responsible and economically capable of performing our obligations; and (ii) the assignee shall expressly assume and agree to perform such obligations.
You expressly affirm and agree that we may sell our assets, our rights to the Marks or to the System outright to a third party; may go public; may engage in a private placement of some or all of our securities; may merge, acquire other corporations, or be acquired by another corporation; may undertake a refinancing, recapitalization, leveraged buyout or other economic or financial restructuring; and, with regard to any or all of the above sales, assignments and dispositions, you expressly and specifically waive any claims, demands or damages arising from or related to the loss of said Marks (or any variation thereof) and/or the loss of association with or identification of "Boomerang Franchise LLC" as Franchisor.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, Hyper Kidz will not assume liability for any act or omission of the franchisee. Specifically, the franchise agreement states that the franchisee is not authorized to make any agreements on Hyper Kidz's behalf, and Hyper Kidz will not be liable for any action or omission by the franchisee.
Furthermore, the franchisee is required to indemnify Hyper Kidz from all claims arising out of the operation of the Hyper Kidz franchise. This means the franchisee is responsible for protecting Hyper Kidz from any losses, expenses, or liabilities resulting from the franchisee's actions, business practices, or advertising. This indemnification extends to the franchisee's agents and employees as well.
This allocation of liability is typical in franchising. Franchisees are generally independent business owners, and as such, they are responsible for their own actions and the actions of their employees. The franchisee must hold Hyper Kidz harmless and reimburse them for any costs incurred. Prospective franchisees should carefully review the indemnification clause in the franchise agreement and ensure they have adequate insurance coverage to protect themselves against potential claims.