What constitutes abandonment of Development Rights for a Cream developer, allowing Cream to terminate the agreement?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
We may terminate this Agreement, effective upon delivery of written notice to you, if:
- (2) you abandon your Development Rights, which may include that you (i) notify us that you will no longer be exercising the Development Rights granted to you under this Agreement, or fail to reply to inquiries from us for more than fifteen (15) consecutive days; or (ii) fail to make progress towards your Development Schedule such that we determine, in our discretion, that satisfaction of your Development Schedule is impossible or impracticable;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, Cream can terminate the Development Agreement if the developer abandons their Development Rights. Abandonment can occur under two specific conditions. First, if the developer notifies Cream that they will no longer exercise their Development Rights, or if they fail to respond to inquiries from Cream for more than 15 consecutive days, Cream may consider this abandonment. Second, Cream may determine that the developer has abandoned their rights if the developer fails to make sufficient progress towards meeting the Development Schedule, leading Cream to believe that fulfilling the schedule is impossible or impractical.
For a prospective Cream developer, this means that consistent communication with Cream is crucial. Failing to respond to Cream's inquiries for just over two weeks could be grounds for termination. More significantly, a developer must actively work towards fulfilling the Development Schedule outlined in their agreement. This requires consistent effort in site selection, securing approvals, and opening new Cream locations according to the agreed-upon timeline.
Cream retains the discretion to determine whether a developer's progress is sufficient to meet the Development Schedule. This subjective element introduces a degree of risk for the developer, as Cream's assessment could be influenced by factors beyond the developer's direct control. Therefore, maintaining open communication with Cream about any challenges or potential delays in meeting the Development Schedule is essential to mitigate the risk of termination.
In the franchise industry, it is common for franchisors to have clauses that allow termination for abandonment or failure to meet development obligations. However, the specific criteria and timelines can vary. A prospective Cream developer should carefully review the Development Agreement and Development Schedule, and seek clarification from Cream regarding any ambiguities or concerns about meeting the required milestones.