What documents must the Cream franchisee (and their owners) and the transferee (and its owners) sign in connection with a transfer?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
- (4) you (and your owners) and the transferee (and its owners) sign all of the documents we are then requiring in connection with a transfer, in a form satisfactory to us, including: (i) a release of any and all claims (except for claims which cannot be released or waived pursuant to applicable law) against us and our affiliates and our and their owners, officers, directors, employees, and agents, and (ii) covenants that you and your transferring owners agree to satisfy all post-termination obligations under this Agreement;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, both the transferring franchisee (and their owners) and the new transferee (and their owners) must sign specific documents to complete a franchise transfer. These documents must be satisfactory to Cream. The required documents include a release of claims (excluding those that cannot be released under applicable law) against Cream and its affiliates, as well as covenants ensuring the transferring franchisee fulfills all post-termination obligations under the Franchise Agreement.
If the transfer involves any beneficial or ownership interest in the franchisee, the transferees must sign Cream's current form of guaranty, which binds them personally and jointly to all provisions of the Franchise Agreement and any related agreements. They must also provide an updated Attachment A, which likely contains information about the owners and their interests. If the transfer involves the Franchise Agreement or Development Rights, the transferee must sign Cream's then-current form of area development agreement and related documents, which may differ significantly from the original agreement.
In the event a franchisee transfers the agreement to a wholly-owned entity, the franchisee must sign Cream's current form of personal guaranty, ensuring they remain personally liable as if the transfer did not occur. They must also sign a consent to assignment and assignment form that is satisfactory to Cream, which may include a release of claims against Cream and its affiliates. These requirements ensure Cream maintains control over who operates its franchises and that all parties are bound by the necessary obligations and agreements.
Prospective franchisees should carefully review Item 23 in the FDD and consult with a legal professional to fully understand the implications of these transfer requirements. Understanding these obligations is crucial before entering into a franchise agreement with Cream.