Does the Kidokinetics franchisee's indemnification obligation extend to damages resulting from the use of Marks and Confidential Information?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the franchisee's indemnification obligations do extend to damages arising from the use of Marks and Confidential Information. Specifically, the franchisee must indemnify, defend, and hold harmless Kidokinetics, its affiliates, and their respective members from all claims, obligations, liabilities, and damages, including taxes, that directly or indirectly arise out of the operation of the franchisee's Kidokinetics business and the use of the Marks and other Confidential Information. This means that if a franchisee's use of Kidokinetics's trademarks or confidential information leads to a claim or lawsuit against the franchisor, the franchisee is responsible for covering the associated costs.
The definition of "Claims" for indemnification purposes is broad, encompassing all obligations, actual, consequential, punitive, and other damages, as well as costs reasonably incurred in the defense of any action. These costs include attorneys', attorney assistants', and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses, and travel and living expenses. This applies whether or not such claims exceed the amount of insurance coverage available to Kidokinetics through the franchisee. 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.
This indemnification clause places a significant financial responsibility on the Kidokinetics franchisee. It is essential for prospective franchisees to fully understand the scope of this obligation and to ensure they have adequate insurance coverage to protect themselves against potential claims related to the use of Kidokinetics's Marks and Confidential Information. Franchisees should also exercise caution and adhere strictly to Kidokinetics's guidelines and policies regarding the use of these assets to minimize the risk of triggering the indemnification clause.