What is the scope of the Cream franchisee's indemnification obligation, including direct and indirect damages?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPTS]
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. For purposes of this indemnification, "claims" include all obligations, damages (actual, consequential, or otherwise), and costs that any Indemnified Party reasonably incurs in defending any claim against it, including reasonable accountants', arbitrators', attorneys', and expert witness fees, costs of investigation and proof of facts, court costs, travel and living expenses, and other expenses of litigation or alternative dispute resolution, regardless of whether litigation or alternative dispute resolution is commenced.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, franchisees have extensive indemnification obligations to Cream and its affiliates. Franchisees must indemnify, defend, and hold harmless Cream and its affiliates, as well as their respective owners, directors, managers, officers, employees, agents, successors, and assignees (collectively known as the "Indemnified Parties"). This means the franchisee is responsible for protecting Cream from any claims, obligations, and damages.
This indemnification extends to all claims, obligations, and damages that arise directly or indirectly from several sources. These include the development and operation of the Cream shop, the business conducted under the Franchise Agreement, any breach of the Franchise Agreement by the franchisee, the franchisee's employment practices, and the actions or omissions of the franchisee, their owners, or their representatives. The scope covers a wide array of potential issues that could arise during the course of the franchise operation.
The franchisee's indemnification responsibility covers all obligations, damages (including actual and consequential damages), and costs that Cream reasonably incurs while defending against any claim. These costs include reasonable fees for accountants, arbitrators, attorneys, and expert witnesses, as well as costs for investigation, proof of facts, court costs, travel and living expenses, and other litigation or dispute resolution expenses, regardless of whether a formal proceeding is initiated. The franchisee's obligation to indemnify Cream is limited only if the claims, obligations, or damages are determined to be caused solely by the Indemnified Party's intentional misconduct, as determined by a final, unappealable ruling from a competent court or arbitrator.