Can an Indemnified Party settle a claim against a Cream franchisee without the franchisee's consent?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
ales, use, service, occupation, excise, gross receipts, income, property, or other taxes, whether levied upon you or your Shop, due to the business you conduct (except for our income taxes). You are responsible for paying these taxes and must reimburse us for any such taxes that we must pay to any state taxing authority on account of your operation or payments that you make to us.
D. INDEMNIFICATION.
You agree to indemnify, defend, and hold harmless us, our affiliates, and each of our and their respective affiliates, owners, directors, managers, officers, employees, agents, successors, and assignees (the "Indemnified Parties") against, and to reimburse any one or more of the Indemnified Parties for, all claims, obligations, and damages directly or indirectly arising out of: (i) the development and operation of your Shop; (ii) the business you conduct under this Agreement; (iii) your breach of this Agreement; (iv) your employment practices, instituted by your employees or by others; and/or (v) the actions or omissions of you, your owners, or your and their respective representatives, unless (and then only to the extent that) the claims, obligations, or damages are determined to be caused solely by the Indemnified Party's intentional misconduct in a final, unappealable ruling issued by a court with competent jurisdiction or arbitrator.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
Based on the 2025 FDD, the document does not explicitly state whether an Indemnified Party can settle a claim against a Cream franchisee without the franchisee's consent. However, the FDD does outline the franchisee's responsibilities regarding indemnification.
Specifically, the Cream franchise agreement stipulates that the franchisee must indemnify, defend, and hold harmless Cream, its affiliates, and their respective personnel (referred to as "Indemnified Parties") from claims, obligations, and damages arising directly or indirectly from the franchisee's business operations, breach of the agreement, employment practices, or actions/omissions. These "claims" include all obligations, damages, and costs incurred by the Indemnified Party in defending against any claim, including legal fees and other expenses, regardless of whether litigation is initiated.
Because the FDD does not explicitly address the ability of an Indemnified Party to settle claims without the franchisee's consent, it is important for a prospective Cream franchisee to seek clarification from the franchisor regarding the franchisor's policies and procedures related to claim settlements and the franchisee's rights and obligations in such situations. Understanding the franchisor's approach to settlements is crucial for assessing the potential financial and legal risks associated with the franchise.