Is the Cream Brand Fund allowed to borrow money to cover deficits?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
We will account for the Brand Fund separately from our other funds. However, neither we nor any of our affiliates has any fiduciary obligation to you or any other person for administering the Brand Fund. The Brand Fund may spend in any fiscal year more or less than the total Brand Fund Contributions in that year, borrow from us or others (paying reasonable interest) to cover deficits, or invest any surplus for future use. We may administer the Brand Fund through a separate entity whenever we deem appropriate, and such entity will have all of the rights and duties specified herein. We have the right, but no obligation, to use collection agents and institute legal proceedings to collect Brand Fund Contributions at the Brand Fund's expense. We may also forgive, waive, settle, and compromise all claims by or against the Brand Fund in our sole discretion.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 FDD, Cream's Brand Fund is permitted to borrow money to cover deficits. Specifically, the FDD states that the Brand Fund may borrow from Cream or other sources, and will pay reasonable interest on any such borrowed funds. This gives Cream flexibility in managing the Brand Fund's finances.
This clause means that if the Brand Fund's expenditures in a given fiscal year exceed the total contributions, Cream has the option to borrow funds to cover the shortfall. This could be beneficial in years where significant marketing initiatives are undertaken. The borrowed funds would need to be repaid with reasonable interest, which would be an expense for the Brand Fund.
As a Cream franchisee, it's important to understand that while the Brand Fund aims to promote the brand and the scoop shops, there is no guarantee that your specific shop will directly benefit from the Brand Fund expenditures, or that the benefits will be proportional to your contributions. The ability of the Brand Fund to borrow money is one aspect of how Cream manages the fund to achieve its objectives.