Can Cream assign the Franchise Agreement to a third party without restriction?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
Landlord hereby consents, without payment of a fee and without the need for further Landlord consent, to (i) the collateral assignment of Tenant's interest in this Lease to Franchisor to secure Tenant's obligations to Franchisor under the Franchise Agreement; (ii) Franchisor's succeeding to Tenant's interest in the Lease as a result of Franchisor's exercise of rights or remedies under such collateral assignment or as a result of Franchisor's termination of, or exercise of rights or remedies granted in or under, any other agreement between Franchisor and Tenant; and/or (iii) Tenant's, Franchisor's, and/or any other franchisee of Franchisor's assignment of the Lease to another franchisee of Franchisor with whom Franchisor has executed its then-standard Franchise agreement.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Cream's ability to assign the Lease for a Jeni's Ice Creams Scoop Shop is not entirely unrestricted. While the landlord consents to certain assignments, specifically collateral assignments to the franchisor or assignments to another Cream franchisee, these are subject to conditions. The landlord agrees to the collateral assignment of the tenant's (franchisee's) interest in the lease to Cream to secure the franchisee's obligations under the Franchise Agreement. Additionally, the landlord consents to Cream succeeding to the tenant's interest in the lease if Cream exercises its rights under the collateral assignment or terminates any agreement with the tenant. The landlord also consents to the assignment of the lease to another Cream franchisee with whom Cream has a standard franchise agreement. These assignments are permitted without any fee or further consent from the landlord.
However, the FDD excerpt does not explicitly state whether the franchisee can freely assign the Franchise Agreement to any third party without Cream's consent. The document focuses primarily on the landlord's consent to assignments involving Cream or another franchisee. This suggests that while certain assignments are pre-approved by the landlord, other types of assignments might require additional consent or be subject to certain restrictions outlined elsewhere in the Franchise Agreement.
Therefore, a prospective Cream franchisee should carefully review the entire Franchise Agreement to understand the full scope of assignment rights and restrictions. Specifically, they should look for clauses that address the franchisee's ability to assign the agreement to entities other than Cream or its other franchisees. It would be prudent to discuss this matter with Cream directly to clarify the conditions under which a franchisee can assign their rights and obligations under the Franchise Agreement to a third party. Understanding these conditions is crucial for future business planning and potential exit strategies.