Does the franchisee's obligation to pay sums to Kidokinetics include attorney's fees?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- 17.1.4. promptly pay all sums owing to Franchisor and its affiliates. Such sums will include all damages, costs and expenses, including reasonable attorneys' fees, incurred by Franchisor as a result of any default by Franchisee. The payment obligation gives rise to and remains until paid in full, a lien in favor of Franchisor against any and all of the personal property, furnishings, equipment, fixtures and vehicles owned by Franchisee and used in the operation of the Kidokinetics Business at the time of default;
- 17.1.5. pay to Franchisor all damages, costs and expenses, including reasonable attorneys' fees, incurred by Franchisor in connection with obtaining any remedy available to Franchisor for any violation of this Agreement and, subsequent to the termination or expiration of this Agreement, in obtaining injunctive or other relief for the enforcement of any provisions of this Agreement that survive its termination;
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.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, franchisees may be obligated to pay attorney's fees in certain circumstances. Specifically, if a franchisee defaults on their obligations to Kidokinetics, they are responsible for covering all damages, costs, and expenses incurred by Kidokinetics, including reasonable attorney's fees. This obligation remains in effect until all outstanding amounts are paid in full, and Kidokinetics can place a lien on the franchisee's business property to secure the debt.
Additionally, franchisees are required to pay all damages, costs, and expenses, including reasonable attorney's fees, that Kidokinetics incurs while pursuing legal remedies for any violation of the Franchise Agreement. This includes actions taken after the agreement's termination to enforce any surviving provisions.
Furthermore, the Franchise Agreement stipulates that franchisees must indemnify Kidokinetics, its affiliates, and related parties against all claims, obligations, liabilities, and damages, including attorney's fees, arising from various aspects of the franchisee's business operations. These aspects include the operation of the Kidokinetics business, advertising, use of trademarks, and any infringement of proprietary rights. This indemnification extends to all costs reasonably incurred in defending against any action, including fees for attorneys, assistants, expert witnesses, and other litigation expenses, regardless of whether these claims exceed the available insurance coverage.
In summary, a Kidokinetics franchisee should be aware that their financial obligations to Kidokinetics can extend beyond standard fees and royalties to include significant legal costs under certain conditions, such as default, violations of the Franchise Agreement, or claims arising from their business operations.