What is the consequence of a Cream franchisee terminating the franchise agreement for a reason other than Cream's material failure to comply?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
If you and your owners are fully complying with this Agreement and we materially fail to comply with this Agreement and do not correct the failure within 30 days after you deliver written notice of the material failure to us or if we cannot correct the failure within 30 days and we fail to give you within 30 days after your notice reasonable evidence of our effort to correct the failure within a reasonable time, you may terminate this Agreement effective an additional 30 days after you deliver to us written notice of termination. Your termination of this Agreement other than according to this Section 5.B will be deemed a termination without cause and a breach of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 Cream FDD, if a franchisee terminates the agreement for reasons other than Cream's material failure to comply, it is considered a termination without cause and a breach of the agreement. This has significant implications for the franchisee.
Specifically, the FDD states that if Cream materially fails to comply with the agreement, the franchisee must provide written notice of the failure and allow 30 days for Cream to correct it. If Cream cannot correct the failure within 30 days, they must provide reasonable evidence of their effort to correct the failure within a reasonable time. Only then can the franchisee terminate the agreement, with an additional 30 days' written notice of termination. Terminating the agreement outside of these specific conditions constitutes a breach.
This clause is important because a breach of contract can lead to financial penalties and legal action from Cream. Franchisees should be aware of the specific conditions under which they can terminate the agreement without being in breach, and they should carefully document any instances of Cream's failure to comply with the agreement. It is advisable to seek legal counsel before making any decisions about terminating the franchise agreement to ensure compliance with its terms and to understand the potential consequences.