Who is Cream entitled to rely on for decisions regarding the Cream franchise agreement if the franchisee is an Entity?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are a corporation, limited liability company, or partnership (each, an "Entity"), you represent that you have the authority to execute, deliver, and perform your obligations under this Agreement and all related agreements and are duly organized or formed. You agree to remain validly existing and in good standing under the laws of the state of your formation throughout the Term. You agree to maintain organizational documents, including your operating agreement or partnership agreement, as applicable, that reflect the restrictions on issuance and transfer of any ownership interests
in you described in this Agreement, and all certificates and other documents representing ownership interests in you will bear a legend referring to this Agreement's restrictions.
You agree and represent that Attachment A to this Agreement completely and accurately describes all of your owners and their interests in you as of the Effective Date. Each of your owners with a 10% or greater ownership interest in your Entity must execute a guarantee in the form we prescribe undertaking personally to be bound, jointly and severally, by all provisions of this Agreement and any ancillary agreements between you and us. Our current form of guarantee is attached herein as Attachment D. Subject to our rights and your obligations under Section 12, you and your owners agree to sign and deliver to us revised Attachment A to reflect any permitted changes in the information that Attachment A now contains.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, if a franchisee is a corporation, limited liability company, or partnership (collectively referred to as an "Entity"), Cream is entitled to rely on the Entity's representation that it has the authority to execute, deliver, and perform its obligations under the franchise agreement and all related agreements. Cream also requires that the Entity is duly organized or formed and remains validly existing and in good standing under the laws of its state of formation throughout the term of the agreement.
Furthermore, Cream requires the Entity to maintain organizational documents, such as operating or partnership agreements, that reflect the restrictions on the issuance and transfer of any ownership interests as described in the franchise agreement. All certificates and other documents representing ownership interests in the Entity must include a legend referring to these restrictions. This ensures that any changes in ownership or control of the Entity comply with the terms of the franchise agreement.
Cream also requires a complete and accurate description of all of the Entity's owners and their interests in the Entity as of the effective date of the agreement, documented in Attachment A. Each owner with a 10% or greater ownership interest in the Entity must execute a personal guarantee, binding them jointly and severally to all provisions of the franchise agreement and any ancillary agreements. This guarantee is in the form prescribed by Cream and attached as Attachment D. Cream also requires that the Entity and its owners sign and deliver revised Attachment A to reflect any permitted changes in the information it contains, subject to Cream's rights and the Entity's obligations under Section 12 of the agreement.