What form of franchise agreement will the transferee of a Cream franchise be required to sign?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
- (8) the transferee must (if the transfer is of this Agreement or your Shop), sign our then-current form of franchise agreement and related documents, any and all of the provisions of which may differ materially from any and all of those contained in this Agreement, including the Royalty and the Brand Fund Contribution; provided, that the term of the new franchise agreement signed will equal the then-remaining Term;
- (9) the transferee(s) must (if the transfer is any beneficial or ownership interest in you) (i) sign our then-current form of guaranty undertaking personally to be bound, jointly and severally, by all provisions of this Agreement and any ancillary agreements between you and us, and (ii) provide us with an updated Attachment A;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, if a franchisee transfers their existing franchise agreement or shop to a new owner, that transferee must sign Cream's then-current form of franchise agreement and related documents. This new agreement may have provisions that differ significantly from the original agreement, including potential changes to royalty fees and brand fund contributions. However, the term of the new franchise agreement will match the remaining term of the original agreement.
This requirement ensures that Cream can update its franchise agreements to reflect current business practices and legal standards. For a prospective transferee, this means they need to be prepared to operate under potentially different terms than the original franchisee. It is crucial to carefully review the new franchise agreement to understand any changes in obligations or fees.
Furthermore, if the transfer involves any beneficial or ownership interest in the existing franchise, the transferee must sign Cream's current form of guaranty. This guaranty ensures that the transferee is personally bound by all provisions of the franchise agreement and any related ancillary agreements. Additionally, an updated Attachment A must be provided to Cream.
In addition to signing the new franchise agreement or guaranty, the transferee may also be required to upgrade, remodel, and refurbish the shop to meet Cream's current standards. The transferee may need to escrow an amount approved by Cream for these upgrades. This ensures that all Cream locations maintain a consistent brand image and quality, but it also represents a potentially significant upfront investment for the transferee.