What is the duration of the covenant not to compete for a Cream franchise after termination or expiration of the agreement?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
For two years beginning on the date of termination or expiration of this Agreement, you and your owners agree not to (and to use each of your best efforts to cause each of your respective current and former spouses, immediate family members, owners, officers, directors, employees, representatives, affiliates, successors and assigns not to): (1) have any direct or indirect interest as an owner (whether of record, beneficially, or otherwise) in a Competitive Business; and/or (2) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, in each case, if such Competitive Business is located or operating:
- (a) within the Development Area, or
- (b) within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop.
If any person restricted by this Section fails to comply with these obligations as of the date of termination or expiration, the two-year restricted period for that person will commence on the date the person begins to comply with this Section, which may be the date a court order is entered enforcing
this provision. You and your owners expressly acknowledge that you possess skills and abilities of a general nature and have other opportunities for exploiting these skills. Consequently, our enforcing the covenants made in this Section will not deprive you of your personal goodwill or ability to earn a living. 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, franchisees and their owners are subject to a covenant not to compete for two years after the termination or expiration of the franchise agreement. This restriction begins on the date of termination or expiration. However, if someone fails to comply with the non-compete obligations, the two-year period starts when they begin to comply with the terms, potentially after a court order is issued.
During this two-year period, franchisees and their owners (including their spouses, family members, owners, officers, etc.) cannot have a direct or indirect interest in a Competitive Business. They are also prohibited from performing services for a Competitive Business as a director, officer, manager, employee, consultant, representative, or agent.
The non-compete restrictions apply if the Competitive Business is located or operating within the Development Area or within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop. These restrictions also apply to the transferor and its owners for two years after any transfer, as if the agreement had been terminated for those parties on the transfer date. Cream states that franchisees possess general skills and abilities and have other opportunities to earn a living, so enforcing these covenants will not deprive them of their personal goodwill or ability to earn a living.