What constitutes 'control' of a person according to the Cream franchise agreement?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
References in this Agreement to: (1) "we," "us," and "our," with respect to all of our rights and all of your obligations to us under this Agreement, include any of our affiliates with whom you deal; (2) "affiliate" of any person means any other person that is directly or indirectly owned or controlled by, under common control with, or owning or controlling such person; (3) "control" of any person means the ownership interest of greater than 50% of the outstanding ownership interests of any entity, and/or the power to direct or cause the direction of management and policies; (4) "ownership interest" means any direct or indirect title, ownership and/or beneficial interest in the equity, voting rights, or economic interest in any Entity; (5) "owner" means any person that holds any direct or indirect ownership interest in an Entity; (6) "person" means any natural person, Entity, unincorporated association, cooperative, or other legal or functional organization; (7) unless otherwise specified, "days" means calendar days and not business days; and (8) "your Shop" includes all of the assets of the Jeni's Ice Creams Scoop Shop you operate under this Agreement, including its revenue and the Lease. The use of the term "including" in this Agreement, means in each case "including, without limitation." If two or more persons are at any time the owners of your Shop, whether as partners or joint venturers, their obligations, and liabilities to us will be joint and several.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, 'control' of a person or entity is defined specifically within the context of the franchise agreement. Cream defines control as owning more than 50% of the outstanding ownership interests in an entity. Alternatively, control can also mean having the power to direct or influence the management and policies of the entity.
For a prospective Cream franchisee, this definition is important because it clarifies who Cream considers to be in control of the franchise entity. If a franchisee owns more than 50% of the franchise, or if they have the power to dictate management decisions, Cream will consider them to be in control. This definition is relevant in various aspects of the franchise agreement, including transfer of ownership, compliance, and other legal considerations.
This definition ensures that Cream can clearly identify the individuals or entities responsible for the franchise's operations and adherence to the franchise agreement. It also has implications for any potential transfer of ownership or changes in the management structure of the franchise. Franchisees should be aware of this definition and its implications for their ownership and management responsibilities.