What is Attachment D and why is it important for Cream franchise transfers?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
ent's restrictions.
You agree and represent that Attachment A to this Agreement completely and accurately describes all of your owners and their interests in you as of the Effective Date. Each of your owners with a 10% or greater ownership interest in your Entity must execute a guarantee in the form we prescribe undertaking personally to be bound, jointly and severally, by all provisions of this Agreement and any ancillary agreements between you and us. Our current form of guarantee is attached herein as Attachment D. Subject to our rights and your obligations under Section 12, you and your owners agree to sign and deliver to us revised Attachment A to reflect any permitted changes in the information that Attachment A now contains.
You must identify on Attachment A one of your owners who is a natural person and who will have authority and signatory power on behalf of you (the "Principal Owner").
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, Attachment D is a Guaranty and Assumption of Obligations. This attachment is crucial in franchise agreements and area development agreements. It ensures that if the franchisee is an entity, such as a corporation or LLC, the individuals with a significant ownership interest (10% or greater) personally guarantee the franchisee's obligations under the agreement. This means that these individuals are personally liable for the franchisee's performance and adherence to the terms of the franchise agreement.
Attachment D is also relevant during franchise transfers. Specifically, if the transfer involves any beneficial or ownership interest in the franchisee entity, the transferees must sign Cream's current form of guaranty, which includes an updated Attachment D. This ensures that the new owners or stakeholders are also personally bound by the obligations of the franchise agreement. This requirement provides Cream with an additional layer of security, as it ensures that individuals with a vested interest in the franchise are committed to upholding the agreement's terms.
For a prospective Cream franchisee, understanding Attachment D is essential. If the franchisee operates as an entity, they need to be aware that individuals with a 10% or greater ownership stake will be required to sign a personal guarantee, making them personally liable for the franchise's obligations. Furthermore, during any transfer of ownership, the new owners will also need to sign a similar guarantee and updated Attachment D. This requirement can impact the pool of potential buyers and the negotiation process during a franchise transfer, as it adds a layer of personal liability for the incoming owners.