Who is responsible for indemnifying Spray Net against costs and liabilities incurred while operating a Spray Net franchise on behalf of a deceased or disabled franchisee?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event of Franchisee's death, disability, absence or otherwise, Franchisor may (but is not required to) operate the Franchised Business on Franchisee's behalf and at Franchisee's expense for such period of time (and under such terms and conditions) as Franchisor determines, including paying out the assets and/or revenues of the Franchised Business to cover any or all past, current and/or future obligations of the Franchised Business (including any amounts owed to Franchisor and/or any affiliate) in such priorities as Franchisor determines in Franchisor's sole discretion.
Franchisor may pay itself a reasonable amount to reimburse Franchisor for Franchisor's management services and other costs.
Franchisor may obtain approval of a court or arbitrator for any such arrangements, the attorney's fees and other costs incurred in connection with obtaining such approval to be charged against the assets and/or revenues of the Franchised Business.
Franchisee (and/or Franchisee's estate) will indemnify Franchisor against any costs and/or liabilities incurred by it in connection with, or related in any way to, the operation (or otherwise) of the Franchised Business.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, in the event of a franchisee's death, disability, or absence, Spray Net has the option, but not the obligation, to operate the franchise on the franchisee's behalf and at the franchisee's expense. This includes using the assets and revenues of the franchise to cover any past, current, or future obligations, including amounts owed to Spray Net or its affiliates. Spray Net can also pay itself a reasonable amount to cover management services and other costs. They may also seek court or arbitrator approval for these arrangements, with the associated legal fees charged against the franchise's assets or revenues.
However, the franchisee (or the franchisee's estate) is responsible for indemnifying Spray Net against any costs or liabilities incurred in connection with the operation of the franchised business. This means that if Spray Net operates the business on behalf of a deceased or disabled franchisee, the franchisee's estate is ultimately responsible for covering any costs or liabilities that Spray Net incurs during that time.
This arrangement protects Spray Net from financial risks associated with temporarily managing a franchise on behalf of a franchisee who is unable to do so themselves. It also ensures that any outstanding debts or obligations of the franchise are addressed using the franchise's assets. For a prospective franchisee, this highlights the importance of having a solid business plan and adequate insurance to cover potential liabilities, as well as ensuring their estate is prepared to handle such obligations in the event of death or disability.