What actions can an Indemnified Party take regarding settlements or remedial actions under the Cream franchise agreement?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
Each Indemnified Party may defend any claim against it at your expense and agree to settlements or take any other remedial, corrective, or other actions. This indemnity will continue in full force and effect subsequent to and notwithstanding this Agreement's expiration or termination. An Indemnified Party need not seek recovery from any insurer or other third party, or otherwise mitigate its losses and expenses, in order to maintain and recover fully a claim against you under this subparagraph. You agree that a failure to pursue a recovery or mitigate a loss will not reduce or alter the amounts that an Indemnified Party may recover from you under this Section 16.D. Any Indemnified Party may demand that you advance funds to such Indemnified Party to pay for any claims that are indemnifiable under this Section 16.D, and you will advance such funds promptly upon demand; provided, however, that if (and only to the limited extent that) any such claim is ultimately determined not to be indemnifiable under this Section 16.D in a final, unappealable ruling issued by a court with competent jurisdiction or arbitrator, such Indemnified Party must reimburse any portion of such funds that are attributable to such non-indemnifiable claims.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, an Indemnified Party has broad authority in handling claims for which they seek indemnification from the franchisee. Specifically, an Indemnified Party can defend any claim at the franchisee's expense. They also have the right to agree to settlements or take any remedial or corrective actions they deem necessary.
This means that Cream, its affiliates, and their respective personnel have considerable leeway in how they manage legal claims or other issues that arise from the franchisee's operations or breaches of the franchise agreement. The franchisee is responsible for covering the costs associated with these actions, which could include settlements, corrective measures, and legal defense.
Furthermore, the Indemnified Party does not have to seek recovery from insurance or other third parties, nor do they have to mitigate their losses to fully recover a claim against the franchisee. Cream can also demand that the franchisee advance funds to cover claims that are subject to indemnification. However, if a court or arbitrator ultimately rules that a claim is not indemnifiable, the Indemnified Party must reimburse the franchisee for the portion of funds attributable to the non-indemnifiable claims. This arrangement places a significant financial burden on the franchisee, as they may be required to pay for claims upfront, even if the validity of those claims is still in question.