To what responsibilities does the indemnification provision in Section 19.4 of the Mr. Sandless Franchise Agreement pertain?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
You shall require and obtain execution of covenants similar to those set forth in this Section 19.4 (including covenants applicable upon the termination of a person's employment with you) from all employees, contractors or third persons who will have access to Mr. Sandless proprietary and Confidential Information, and shall provide to us to an executed versions thereof. Such covenants shall be substantially in the form set forth in Attachment 4 as revised and updated from time to time and contained in the Manual. You shall indemnify and hold us harmless from any and all liability, loss, attorneys' fees, or damage we may suffer as a result of your failure to obtain executed restricted covenants by employees, agents and third persons as required by this Section.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2025 FDD)
According to the 2025 Mr. Sandless Franchise Disclosure Document, Section 19.4 of the Franchise Agreement, in conjunction with Section 18.4, outlines the franchisee's responsibilities regarding confidentiality and non-competition agreements with their employees, agents, and third parties. Specifically, franchisees must obtain executed covenants similar to those detailed in Attachment 4 from anyone who has access to Mr. Sandless's proprietary and confidential information.
The franchisee is obligated to protect Mr. Sandless from any liabilities, losses, attorney's fees, or damages that the company might incur if the franchisee fails to secure these executed restricted covenants from their personnel. This indemnification clause means that if an employee, contractor, or agent of the franchisee violates the confidentiality or non-competition terms, and this violation causes financial harm to Mr. Sandless, the franchisee will be responsible for compensating Mr. Sandless for those losses.
This requirement is fairly standard in franchising, as franchisors need to protect their trade secrets and business methods. For a prospective Mr. Sandless franchisee, this means carefully managing employees and third parties, ensuring they sign the required agreements, and understanding that failure to do so could result in direct financial liability to the franchisor. The franchisee should ensure they understand the terms of Attachment 4 and implement procedures to consistently enforce these confidentiality and non-competition obligations.