Is a Cream franchisee required to advance funds to an Indemnified Party for claims that are potentially indemnifiable?

According to Cream's 2025 Franchise Disclosure Document, Cream franchisees are required to advance funds to an Indemnified Party to cover claims that are potentially indemnifiable. An Indemnified Party, which includes Cream, its affiliates, and their respective personnel, may demand that the franchisee advance funds to pay for claims that fall under the indemnification clause. The franchisee must provide these funds promptly upon demand.

However, there is a condition attached to this requirement. If a court or arbitrator issues a final, unappealable ruling that determines a claim is not indemnifiable, the Indemnified Party must reimburse the franchisee for any funds advanced that are attributable to the non-indemnifiable claims. This provision ensures that while franchisees must initially provide funds for potentially covered claims, they are entitled to reimbursement if the claim is ultimately deemed not to be their responsibility.

This arrangement means that a Cream franchisee could face immediate financial obligations for legal claims, even if the franchisee is not ultimately liable. It is crucial for prospective franchisees to understand the scope of the indemnification clause and the potential financial burden it could impose. Franchisees should carefully review the circumstances under which they might be required to advance funds and the process for seeking reimbursement if a claim is later determined to be non-indemnifiable.