Does the Cream Area Development Agreement prohibit diverting customers to a competitive business?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
You will not receive an exclusive territory under the Area Development Agreement. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. However, as long as you are in compliance with your Area Development Agreement, all Franchise Agreements signed pursuant to the Area Development Agreement, and subject to the exclusions and limitations described below, neither we nor any of our affiliates will establish or operate or authorize any other person to establish or operate a Jeni's Ice Creams Scoop Shop in your Development Area. Otherwise, you have no territorial protection and we and our affiliates retain all rights to conduct business activities of any kind, including the right to:
(1) establish and operate, and allow others to establish and operate, other Jeni's Ice Creams Scoop Shops using the System, at any location outside the Development Area, on such terms and conditions we deem appropriate;
(2) establish and operate, and allow others to establish and operate, any other type of business, including any business that may offer products and services which are identical to, similar to, or competitive with products and services offered by Jeni's Ice Creams Scoop Shops, under trade names, trademarks, service marks, and commercial symbols other than the "Jeni's®" name and marks, anywhere in the world, including in the Development Area;
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 44–51)
What This Means (2025 FDD)
According to the 2025 FDD, the Cream Area Development Agreement does not provide an exclusive territory. Cream and its affiliates retain the right to conduct business activities of any kind, including operating businesses that offer products or services identical, similar, or competitive with Cream, under different trade names and marks, even within the Development Area. This means that Cream can establish other businesses, including competitive ones, within the franchisee's Development Area.
Cream and its affiliates can establish businesses and distribution channels other than a Cream Scoop Shop, including selling products at retail, wholesale, or online, within the Development Area. This includes businesses that operate under names and symbols that are similar to or competitive with Cream, and those that sell similar products, including Cream-branded items at third-party businesses. Cream also reserves the right to conduct marketing and promotional activities, including those involving product giveaways and sales of similar products, within the Development Area.
Furthermore, Cream or its affiliates can be acquired by or acquire other businesses, including those that are competitive with Cream Scoop Shops, at any location, including within the Protected Territory. In the event of such an acquisition, Cream or the acquiring entity can continue to operate or authorize the operation of these competitive businesses anywhere, including within the Development Area. The only restriction is that the franchisee must comply with the Area Development Agreement and all Franchise Agreements signed under it to maintain the limited territorial protection offered, which prevents Cream from operating another Jeni's Ice Creams Scoop Shop within the Development Area.