Does the covenant not to compete for a Cream franchise apply after a transfer of the franchise?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
The restrictions in this Section will also apply after any transfer, to the transferor and its owners, for a period of two years beginning on the effective date of the transfer, with the force and effect as though this Agreement had been terminated for such parties as of such date.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, the non-compete agreement does apply after a transfer of the franchise. Specifically, the restrictions outlined in the covenant not to compete extend to the transferor and their owners.
Following a transfer, the transferor and their owners are subject to the non-compete terms for a period of two years. This two-year period begins on the effective date of the transfer. The terms are enforced as if the franchise agreement had been terminated for those parties on that date.
This means that if a Cream franchisee sells their franchise, they (and their owners) cannot engage in a competitive business within the specified geographic area for two years after the sale. This provision ensures that the transferor does not immediately open a competing business and undermine the value of the franchise they just sold.