What is the duration of the non-compete period for the transferor of a Cream franchise after the effective date of the transfer?
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 restrictions outlined in the covenant not to compete also apply after any transfer of the franchise. Specifically, the transferor and their owners are subject to these restrictions for a period of two years. This two-year period begins on the effective date of the transfer.
This means that if a Cream franchisee sells their franchise, they (and their owners) cannot be involved in a competitive business within the defined restricted area for two years after the sale is finalized. The restrictions carry the same force as if the franchise agreement had been terminated for those parties on the date of the transfer.
This non-compete provision is designed to protect Cream's brand and market position by preventing former franchisees from using their knowledge and experience to compete unfairly. Prospective franchisees should carefully consider the implications of this restriction, especially if they plan to remain in the same geographic area or industry after selling their franchise. It is important to understand the scope of what constitutes a "Competitive Business" as defined in the franchise agreement to ensure compliance.