What claims are Cream franchisees required to release upon transfer of the franchise?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
nsfer, and all other information we request about the proposed transfer, and such transfer meets all of our requirements, including terms, closing date, purchase price, amount of debt and payment terms, and we have determined that the purchase price and other terms of the transfer will not adversely affect the operation of your Shop;
- (4) you (and your owners) and the transferee (and its owners) sign all of the documents we are then requiring in connection with a transfer, in a form satisfactory to us, including: (i) a release of any and all claims (except for claims which cannot be released or waived pursuant to applicable law) against us and our affiliates and our and their owners, officers, directors, employees, and agents, and (ii) covenants that you and your transferring owners agree to satisfy all post-termination obligations under this Agreement;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, when transferring a franchise, both the franchisee and their owners must generally sign a release of claims against Cream and its affiliates. This release covers any and all claims, except those that cannot be released or waived under applicable law. The release extends to Cream, its affiliates, and their respective owners, officers, directors, employees, and agents.
This requirement is part of the standard conditions for Cream's approval of a franchise transfer. In addition to the release, franchisees must also ensure that all post-termination obligations under the Franchise Agreement are satisfied. This ensures Cream is protected from potential liabilities or disputes arising from the franchisee's prior operation of the business. The transferee must also sign Cream's then-current form of franchise agreement and related documents.
However, there are some state-specific exceptions to this release requirement. For example, in Maryland and Minnesota, any release required as a condition of transfer will not apply to claims arising under the Maryland Franchise Registration and Disclosure Law or to the extent prohibited by Governing Law with respect to claims arising under Minn. Rule 2860.4400D. This means that franchisees in these states retain their rights to pursue certain legal claims against Cream, even after transferring their franchise. Prospective franchisees should carefully review these state-specific provisions and consult with legal counsel to understand their rights and obligations when transferring a Cream franchise.