Does Cream have a fiduciary obligation to franchisees for administering the Brand Fund?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
We will account for the Brand Fund separately from our other funds. However, neither we nor any of our affiliates has any fiduciary obligation to you or any other person for administering the Brand Fund. The Brand Fund may spend in any fiscal year more or less than the total Brand Fund Contributions in that year, borrow from us or others (paying reasonable interest) to cover deficits, or invest any surplus for future use. We may administer the Brand Fund through a separate entity whenever we deem appropriate, and such entity will have all of the rights and duties specified herein. We have the right, but no obligation, to use collection agents and institute legal proceedings to collect Brand Fund Contributions at the Brand Fund's expense. We may also forgive, waive, settle, and compromise all claims by or against the Brand Fund in our sole discretion.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, Cream does not have a fiduciary obligation to franchisees regarding the Brand Fund. Cream will maintain the Brand Fund separately from its other funds. Cream can spend more or less than the total contributions in any fiscal year, borrow funds to cover deficits, or invest any surplus for future use. Cream may also administer the Brand Fund through a separate entity. Cream has the right to collect unpaid Brand Fund contributions and may also forgive, waive, settle, and compromise claims related to the Brand Fund at its discretion.
Cream established the Brand Fund to manage advertising, marketing, and public relations for the Cream system and Jeni's Ice Creams Scoop Shops. Franchisees must contribute to the Brand Fund, with the contribution currently set at 2% of Net Sales. Cream can change this amount with 30 days' notice, but it will not exceed 4% of Net Sales. Cream has exclusive control over the Brand Fund's programs and services, including creative concepts, materials, campaigns, and their allocation.
Cream may use the Brand Fund for various activities, such as producing marketing materials, sponsoring events, developing digital presences, and covering administrative costs, including salaries for personnel managing the Brand Fund. Cream can modify these programs and expenditures at any time. Cream may also reduce or suspend Brand Fund contributions or operations, or even terminate the Brand Fund, provided they give prior written notice. If terminated, the remaining balance will be spent in accordance with the outlined guidelines. Cream can also maintain multiple Brand Funds based on geography or consolidate them, as long as each fund adheres to the specified guidelines.