Can Cream assign its option to purchase the Shop to another party?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
We have the option to purchase any or all of the assets of your Shop, including your Premises (if you or one of your owners or affiliates owns the Premises) upon termination or expiration of this Agreement. We have the unrestricted right to assign this option to purchase. We may exercise this option by giving you written notice within 30 days after the date of such termination or expiration. The purchase price for your Shop will be the net realizable value of the tangible assets in accordance with the liquidation basis of accounting (not the value of your Shop as a going concern). If you dispute our calculation of the purchase price, the purchase price will be determined by one independent accredited appraiser designated by us who will calculate the purchase price applying the criteria specified above. We agree to select the appraiser within 15 days after we receive the financial and other information necessary to calculate the purchase price (if you, and we have not agreed on the purchase price before then). You and we will share equally the appraiser's fees and expenses. The appraiser must complete its calculation within 30 days after its appointment. We may set off against the purchase price, and reduce the purchase price by, any and all amounts you or your owners owe us or our affiliates.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, Cream has the unrestricted right to assign its option to purchase a franchise location. This option becomes relevant upon the termination or expiration of the Franchise Agreement. Cream can exercise this option by providing written notice within 30 days after the termination or expiration date.
If Cream exercises its option to purchase the Shop, the purchase price will be based on the net realizable value of the tangible assets, calculated according to the liquidation basis of accounting, rather than the Shop's value as a going concern. If the franchisee disputes Cream's calculation of the purchase price, an independent accredited appraiser designated by Cream will determine the price, applying the same criteria. The appraiser must be selected within 15 days after Cream receives the necessary financial information, and the appraisal must be completed within 30 days of the appraiser's appointment. The costs for the appraiser will be shared equally between Cream and the franchisee.
Cream can also deduct any amounts owed by the franchisee or their owners to Cream or its affiliates from the purchase price. This means that any outstanding debts, fees, or other financial obligations can reduce the final amount the franchisee receives for their Shop. This clause provides Cream with significant flexibility in transferring its purchase option and potentially acquiring franchise locations at a value that may not reflect the business's full potential as an operating entity.