What financial obligation remains after termination of the Cream agreement?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
aived pursuant to an applicable franchise statute) against us and our owners, affiliates, officers, directors, employees, agents, successors, and assigns. If you cannot deliver clear title to all of the purchased assets, or if there are other unresolved issues, we and you will close the sale through an escrow.
E. LOST REVENUE DAMAGES.
If we terminate this Agreement because of your breach or if you terminate this Agreement without cause, you and we agree that it would be difficult, if not impossible, to determine the amount of damages that we would suffer due to the loss or interruption of the revenue stream we otherwise would have derived from your continued payment of Royalties, and that the Brand Fund would have otherwise derived from your continued contributions to those funds, through the remainder of the Term. Therefore, you and we agree that a reasonable estimate of such damages, less any cost savings we might have experienced (the "Lost Revenue Damages") is an amount equal to the net present value of the Royalties and Brand Fund Contributions that would have become due had this Agreement not been terminated, from the date of termination, to the earlier of (1) the 2nd anniversary of the termination date; or (2) the scheduled expiration of the Term. For the purposes of this Section, Royalties and Brand Fund Contributions will be calculated based on the average monthly Net Sales of your Shop during the 12 full calendar months immediately preceding the last date of regular operations of your Shop; provided, that if as of such date your Shop has not been operating for at least 12 months, Royalties and Brand Fund Contributions will be calculated based on the average monthly Net Sales of all Jeni's Ice Creams Scoop Shops operating under the Marks during our last fiscal year.
You agree to pay us Lost Revenue Damages within 30 days after this Agreement is terminated. You and we agree that the calculation described in this Section is a calculation only of the Lost Revenue Damages and that nothing herein shall preclude or limit us from proving and recovering any other damages caused by your breach of the Agreement.
F. CONTINUING OBLIGATIONS.
All of our and your (and your owners') obligations which expressly or by their nature survive this Agreement's expiration or termination 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, including all obligations relating to non-disparagement, non-competition, non-interference, confidentiality, information security, Innovations, and indemnification.
16. RELATIONSHIP OF THE PARTIES/INDEMNIFICATION.
A. INDEPENDENT CONTRACTORS.
This Agreement does not create a fiduciary relationship between you and us, that you and we are and will be independent contractors, and that nothing in this Agreement is intended to make either you or us a general or special agent, joint venturer, partner, or employee of the other for any purpose. You agree to identify yourself conspicuously in all dealings with customers, suppliers, public officials, your personnel, and others as the sole owner and operator of your Shop and to place notices of independent ownership on the forms, business cards, stationery, advertising, and other materials we require from time to time. You also acknowledge that you will have a contractual relationship only
with us and may look only to us to perform under this Agreement, and not our affiliates, designees, officers, directors, employees, or other representatives or agents.
B. NO LIABILITY TO OR FOR ACTS OF OTHER PARTY.
We and you may not make any express or implied agreements, warranties, guarantees, representations, or incur any debt in the name or on behalf of the other or represent that our respective relationship is other than franchisor and franchise owner. We will not be obligated for any damages to any person or property directly or indirectly arising out of the operation of your Shop or the business you conduct under this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, financial obligations may continue after the termination or expiration of the agreement. Cream franchisees may be responsible for paying lost revenue damages, which are calculated to estimate the royalties and brand fund contributions Cream would have received had the agreement remained in effect. This calculation is based on the shop's average monthly net sales during the 12 months before termination, and the damages cover a period up to two years from the termination date. These lost revenue damages must be paid to Cream within 30 days of termination.
In addition to lost revenue damages, all obligations that naturally survive the agreement's termination remain in effect until fully satisfied or expired. These continuing obligations include those related to non-disparagement, non-competition, non-interference, confidentiality, information security, innovations, and indemnification. This means that even after the franchise agreement ends, franchisees must continue to uphold these responsibilities.
Furthermore, upon termination or expiration, franchisees must immediately cease conducting the business, return or destroy confidential information, comply with wind-down standards, and pay all outstanding amounts owed to Cream up to the termination date. Franchisees and their owners also agree not to engage in any competitive business within the development area or within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop for two years following termination or expiration. These comprehensive post-termination obligations highlight the importance of understanding the full scope of responsibilities when entering into a franchise agreement with Cream.