Does the Area Development Agreement for Cream include a franchisor's option to purchase the franchisee's business?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Agreement | Summary |
|---|---|---|
| of first refusal, or there is a material change in terms, we will have an additional right of first refusal. | ||
| (o) Franchisor’s | Franchise Agreement | We may purchase any or all of the assets of your Shop (including |
| option to | – Section 15.D | the Premises, if it is owned by you or one of your owners or |
| purchase | affiliates) upon the termination or expiration of the Franchise | |
| franchisee’s | Agreement. The purchase price will be based upon the net | |
| business | realizable value of the tangible assets in accordance with the liquidation basis of accounting. We may exercise this right by giving you written notice of our election within 30 days after the termination or expiration. If challenged, the purchase price will be determined by an appraiser designated by us, with costs and fees shared equally by both parties. While any decision regarding purchasing your Shop is pending, we may operate your Shop on an interim basis as provided in the Franchise Agreement. | |
| Area Development Agreement | Not Applicable |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 44–51)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, the Area Development Agreement does not include a provision for Cream to purchase the franchisee's business. Item 17 provides a table summarizing key aspects of renewal, termination, transfer, and dispute resolution within both the Franchise Agreement and the Area Development Agreement.
Specifically, under the section "Franchisor’s option to purchase franchisee’s business," the summary indicates that this provision is "Not Applicable" for the Area Development Agreement. This means that Cream does not have a contractual right to buy the Area Developer's business upon termination or expiration of the Area Development Agreement itself.
However, Cream does retain the option to purchase any or all of the assets of your Shop (including the Premises, if it is owned by you or one of your owners or affiliates) upon the termination or expiration of the Franchise Agreement. The purchase price will be based upon the net realizable value of the tangible assets in accordance with the liquidation basis of accounting.