Does the Red Wagon Club indemnity obligation survive termination of the agreement?
Red_Wagon_Club Franchise · 2024 FDDAnswer from 2024 FDD Document
The indemnity obligations outlined herein shall survive any cancellation, expiration, or termination of this Agreement.
For purposes of this indemnification, "claims" include all obligations, damages, and costs that any Indemnified Party reasonably incurs in defending any claim against it, including reasonable accountants', arbitrators', attorneys', and expert witness fees, bailiff's fees, costs of investigation and proof of facts, court costs, travel and living expenses, and other expenses of litigation, arbitration, or alternative dispute resolution.
Each Indemnified Party may defend any claim against it at Licensee's expense and agree to settlements or take any other remedial, corrective, or other actions.
An Indemnified Party need not seek recovery from any insurer or other third parties, or otherwise mitigate its losses and expenses, in order to maintain and recover fully a claim for indemnity under this Section.
Licensee agrees that a failure to pursue a recovery or mitigate a loss will not reduce or alter the amounts that an Indemnified Party may recover under this Section.
An Indemnified Party may use control the defense and settlement of any claims against it in its sole discretion, including choice of its own legal counsel.
Source: Item 23 — RECEIPTS (FDD pages 47–142)
What This Means (2024 FDD)
According to Red Wagon Club's 2024 Franchise Disclosure Document, the indemnity obligations of the licensee survive any cancellation, expiration, or termination of the agreement. This means that even after the franchise agreement ends, the licensee remains responsible for covering costs and damages related to certain claims.
The licensee agrees to indemnify, defend, and hold harmless the franchisee, franchisor, and their respective owners, officers, directors, members, partners, employees, agents, affiliates, successors, permitted assigns, and franchisees from various claims. These claims include those arising from the licensee's violation of the agreement, acts or omissions by the licensee or its employees, and claims relating to taxes or regulatory compliance.
The term "claims" includes all obligations, damages, and costs that any indemnified party reasonably incurs in defending against a claim, including legal fees, investigation costs, and other expenses. An indemnified party can control the defense and settlement of any claims and is not required to seek recovery from insurers or mitigate losses before claiming indemnity. This extended responsibility is a significant consideration for prospective Red Wagon Club licensees, as they could face financial obligations even after the franchise agreement has ended.