What actions are prohibited under the Cream non-compete agreement?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPTS]
E. COVENANT NOT TO COMPETE.
For two years beginning on the date of termination or expiration of this Agreement, you and your owners agree not to (and to use each of your best efforts to cause each of your respective current and former spouses, immediate family members, owners, officers, directors, employees, representatives, affiliates, successors and assigns not to): (1) have any direct or indirect interest as an owner (whether of record, beneficially, or otherwise) in a Competitive Business; and/or (2) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, in each case, if such Competitive Business is located or operating:
- (a) within the Development Area, or
- (b) within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop.
If any person restricted by this Section fails to comply with these obligations as of the date of termination or expiration, the two-year restricted period for that person will commence on the date the person begins to comply with this Section, which may be the date a court order is entered enforcing
this provision. You and your owners expressly acknowledge that you possess skills and abilities of a general nature and have other opportunities for exploiting these skills. Consequently, our enforcing the covenants made in this Section will not deprive you of your personal goodwill or ability to earn a living. The restrictions in this Section will also apply after any transfer, to the transferor and its owners, for a period of two years beginning on the effective date of the transfer, with the force and effect as though this Agreement had been terminated for such parties as of such date.
F. CONTINUING OBLIGATIONS.
All of our and your (and your owners') obligations which expressly or by their nature survive this Agreement's expiration or termination will continue in full force and effect subsequent to and notwithstanding its expiration or termination and until they are satisfied in full or by their nature expire, including all obligations relating to non-disparagement, non-competition, non-interference, confidentiality, information security, Innovations, and indemnification.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, the non-compete agreement outlines specific restrictions on franchisees and related parties following the termination or expiration of the franchise agreement. For a period of two years, the franchisee and their owners must not have a direct or indirect interest in a Competitive Business as an owner. They are also prohibited from performing services for a Competitive Business as a director, officer, manager, employee, consultant, representative, or agent.
These restrictions apply if the Competitive Business is located or operating within the Development Area granted to the franchisee or within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop. The term "Competitive Business" is defined as any business (excluding Jeni's Ice Creams Scoop Shops operated under a franchise agreement with Cream) that operates or grants franchises or licenses to others for businesses where ice cream, ice cream-based desserts or drinks, and/or other frozen desserts or drinks, or similar products represent more than 10% of the total gross revenue.
The agreement specifies that if any restricted person fails to comply with these obligations at the time of termination or expiration, the two-year restricted period will commence on the date they begin to comply. This may be the date a court order is entered to enforce the provision. Cream emphasizes that franchisees possess general skills and abilities and have other opportunities to earn a living, so enforcing these covenants will not deprive them of their personal goodwill or ability to earn a living. The restrictions also apply to transferors after any transfer for two years, as if the agreement had been terminated for those parties.
For a prospective Cream franchisee, this means that after leaving the Cream system, they cannot be involved with a competing ice cream business within their development area or near any Cream location for two years. This restriction extends to ownership, management, and employment roles. Franchisees should carefully consider these limitations and how they might affect their future business opportunities after their franchise term ends.