Does the Kidokinetics Franchise Agreement require the franchisee to indemnify the franchisor for losses arising from the franchise relationship?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
an administrative cost of obtaining the insurance. Franchisee shall pay Franchisor immediately upon notice by Franchisor to Franchisee that Franchisor has undertaken such action and the cost.
- 14.4. Indemnification. Franchisee and Franchisee's principals agree to indemnify, defend and hold Franchisor, its affiliates, and its respective members, directors, officers, employees, agents, partners, shareholders, agents, contractors, successors, assignees, personal representatives, heirs and legatees of all these persons or entities ("Indemnitees") harmless to the fullest extent permitted by law, from and against and to reimburse them for all claims, obligations, liabilities and damages ("Claims"), including any and all taxes, directly or indirectly arising out of, in whole or in part: (a) the operation of Franchisee's Kidokinetics Business, and Franchisee's advertising; (b) the use of the Marks and other Confidential Information; (c) the transfer of any interest in this Agreement or Franchisee's Kidokinetics Business in any manner not in accordance with this Agreement; (d) the infringement, alleged infringement, or any other violation or alleged violation by Franchisee or any of Franchisee's principals of any patent, mark or copyright or other proprietary right owned or controlled by third parties; or (e) libel, slander or any other form of defamation of Franchisor, the System, or System franchisees by Franchisee or any of Franchisee's principals. For purposes of this indemnification, "Claims" will mean and include all obligations, actual, consequential, punitive and other damages, and costs reasonably incurred in the defense of any action, including attorneys', attorney assistants' and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses, and travel and living expenses, whether or not such claims exceed the amount of insurance coverage available to Franchisor through Franchisee. Franchisor has the right to defend any such claim against Franchisor in the manner Franchisor deems appropriate or desirable in Franchisor's discretion. Such an undertaking by Franchisor will, in no manner or form, diminish Franchisee's and each of Franchisee's principals' obligations to indemnify the Indemnitees and to hold them harmless. This indemnity will continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.
Franchisee agrees to give Franchisor notice of any action, suit, proceeding, claim, demand, inquiry, or investigation described above. The Indemnitees shall have the right, in their sole discretion, to: (i) retain counsel of their own choosing to represent them with respect to any Claim; and (ii) control the response thereto and the defense thereof, including the right to enter into an agreement to settle such Claim. Franchisee may participate in such defense at its own expense.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, the Franchise Agreement does require the franchisee to indemnify the franchisor for certain losses. Specifically, the franchisee must indemnify, defend, and hold harmless Kidokinetics, its affiliates, and their agents and employees from claims, obligations, liabilities, and damages, including taxes, arising from several circumstances. These circumstances include the operation of the franchisee's Kidokinetics business and advertising, the use of the Marks and Confidential Information, and the transfer of any interest in the Agreement or the Kidokinetics business not in accordance with the Agreement.
This indemnification also extends to claims related to infringement or alleged infringement of patents, marks, copyrights, or other proprietary rights by the franchisee, as well as libel, slander, or defamation of Kidokinetics, the System, or System franchisees by the franchisee. The term "Claims" includes all obligations, actual, consequential, punitive, and other damages, as well as costs incurred in the defense of any action, including attorney's fees, investigation costs, court costs, and other litigation expenses.
Kidokinetics retains the right to defend any claim against it in the manner it deems appropriate, without diminishing the franchisee's obligation to indemnify and hold harmless the Indemnitees. Additionally, the franchisee agrees to indemnify Kidokinetics if Kidokinetics is held responsible for the franchisee's debts or taxes and elects to pay those obligations to maintain relationships with suppliers or other franchisees within the Kidokinetics system. The franchisee is responsible for paying these costs immediately upon notice from Kidokinetics.