What constitutes a termination without cause of the Cream franchise agreement?
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 FDD, a Cream franchisee's termination of the franchise agreement is considered 'without cause' if it doesn't adhere to the specific procedure outlined in Section 5.B of the agreement. This section dictates that the franchisee must first provide written notice to Cream regarding a material failure on Cream's part to comply with the agreement. Cream then has 30 days to correct this failure.
If Cream cannot rectify the failure within this initial 30-day period, they must provide reasonable evidence of their effort to correct the failure within a reasonable timeframe. Should Cream fail to provide such evidence within 30 days of the franchisee's original notice, the franchisee can then issue a second written notice of termination, which becomes effective 30 days later.
Therefore, if a Cream franchisee terminates the agreement without first providing Cream the opportunity to cure a material breach, or without adhering to the prescribed notice periods, the termination will be deemed 'without cause' and a breach of the agreement. This has significant implications, as Cream could then pursue damages from the franchisee as a result of the unapproved termination.