What is the duration of the non-competition covenant after termination of the Cream Area Development 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 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 44–51)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, both the franchisee and their owners are subject to a non-compete agreement for two years after the termination or expiration of the Area Development Agreement. This restriction prevents them from having a direct or indirect interest in a Competitive Business or working for one as a director, officer, manager, employee, consultant, representative, or agent.
The non-compete applies 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. If someone fails to comply with these obligations initially, the two-year period starts when they begin to comply, potentially after a court order enforces the provision.
Cream emphasizes that franchisees possess general skills and have other opportunities to earn a living, so enforcing the non-compete will not deprive them of their personal goodwill or ability to earn a living. The restrictions also apply to transferors after any transfer for two years, as if the agreement had been terminated for those parties on the transfer date. Cream also states that all obligations relating to non-competition will continue in full force and effect subsequent to and notwithstanding its expiration or termination and until they are satisfied in full or by their nature expire.