Does the Cream franchise agreement require the Indemnified Party to mitigate its losses before seeking indemnification?
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. Any Indemnified Party may demand that you advance funds to such Indemnified Party to pay for any claims that are indemnifiable under this Section, 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 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 the 2025 FDD, the Cream franchise agreement does not require the Indemnified Party to mitigate its losses and expenses before seeking indemnification. The Indemnified Party has the option to defend any claim and agree to settlements or take other remedial actions at the franchisee's expense.
Specifically, the Cream franchise agreement states that the Indemnified Party does not need to seek recovery from any insurer or third party, or otherwise mitigate its losses and expenses. The agreement also specifies that the failure to pursue recovery or mitigate a loss will not reduce or alter the amounts recoverable from the franchisee.
Furthermore, the Indemnified Party can demand that the franchisee advance funds to cover any claims that are indemnifiable, which the franchisee must promptly provide. However, if a court or arbitrator ultimately determines that any portion of the claim is not indemnifiable, the Indemnified Party must reimburse the franchisee for the funds attributable to the non-indemnifiable claims. This arrangement places the initial financial burden on the franchisee while providing a mechanism for reimbursement if the claim is later deemed not indemnifiable.