What is the due date for lost revenue damages owed by a Cream franchisee?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | 1, 2 Remarks |
|---|---|---|---|
| Lost Revenue Damages | The net present value of the Royalties and Brand Fund Contributions from the termination date to the earlier of (i) the 2nd anniversary of termination; or (ii) the scheduled expiration of the franchise term. | Within 30 days after termination | If we terminate the Franchise Agreement because of your default or you terminate without cause, you must pay us lost revenue damages. For purposes of lost revenue damages, Royalties and Brand Fund Contributions will be calculated based on the average monthly Net Sales of your Shop during the last 12 months of its regular operations; provided, that if your Shop has not been operating for at least 12 months, the calculation will be based on the average monthly Net Sales of all Jeni's Ice Creams Scoop Shops during the fiscal year immediately preceding the termination date. |
Source: Item 6 — OTHER FEES (FDD pages 13–17)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, if Cream terminates the Franchise Agreement due to a franchisee's default, or if the franchisee terminates the agreement without a valid reason, the franchisee must pay Cream lost revenue damages. These damages are equivalent to the net present value of the Royalties and Brand Fund Contributions that Cream would have received. This calculation spans from the termination date until the earlier of either the second anniversary of the termination or the scheduled expiration of the franchise term.
The royalties and brand fund contributions used to calculate lost revenue damages are based on the average monthly Net Sales of the Cream shop during its last 12 months of regular operation. However, if the shop has not been operating for at least 12 months, the calculation will be based on the average monthly Net Sales of all Cream Scoop Shops during the fiscal year immediately preceding the termination date.
The due date for these lost revenue damages is within 30 days after the termination date. This is a notable financial obligation that a prospective Cream franchisee should consider, as it could represent a significant expense in the event of early termination, especially if the shop was performing well or if Cream's overall system sales are high.