Does the Cream franchise agreement allow for substitution of provisions if a law requires a different action?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPTS]
A. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS.
Except as expressly provided to the contrary in this Agreement, each section, paragraph, term, and provision of this Agreement is severable, and if, for any reason, any part is held to be invalid or contrary to or in conflict with any applicable present or future law or regulation in a final, unappealable ruling issued by any court, arbitrator, agency, or other tribunal with competent jurisdiction, that ruling will not impair the operation of, or otherwise affect, any other portions of this Agreement, which will continue to have full force and effect and bind the parties.
If any covenant which restricts competitive activity is deemed unenforceable by virtue of its scope in terms of area, business activity prohibited, or length of time, but would be enforceable if modified, you and we agree that the covenant will be enforced to the fullest extent permissible under the laws and public policies applied in the jurisdiction whose law determines the covenant's validity.
If any applicable and binding law or rule of any jurisdiction requires more notice than this Agreement requires or some other action that this Agreement does not require, or if, under any applicable and binding law or rule of any jurisdiction, any provision of this Agreement or any System Standard is invalid, unenforceable, or unlawful, the notice or other action required by the law or rule will be substituted for the comparable provisions of this Agreement, and we may modify the invalid or unenforceable provision or System Standard to the extent required to be valid and enforceable or delete the unlawful provision in its entirety. You agree to be bound by any promise or covenant imposing the maximum duty the law permits which is subsumed within any provision of this Agreement, as though it were separately articulated in and made a part of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 FDD, the Cream franchise agreement addresses the possibility of conflicts with applicable laws. The agreement states that if any law or rule requires more notice or a different action than what the agreement stipulates, the law will take precedence. Specifically, the notice or action required by law will be substituted for the comparable provisions in the Cream franchise agreement. Furthermore, Cream has the option to modify any invalid or unenforceable provision or System Standard to ensure it is valid and enforceable, or to remove any unlawful provision entirely. The franchisee agrees to be bound by the maximum duty the law permits, even if it's not explicitly stated in the agreement.
This clause ensures that Cream franchisees are not put in a position of violating local, state, or federal laws due to the franchise agreement's terms. It also provides Cream with the flexibility to adapt the agreement to comply with legal requirements, which can be beneficial in the long run.
For a potential Cream franchisee, this means that certain aspects of the franchise agreement could be altered to align with specific legal requirements in their jurisdiction. It is important to understand which laws might affect the franchise agreement in the relevant area and to discuss these potential modifications with Cream during the due diligence process. This clause aims to provide a legally sound framework for the franchise operation, but franchisees should still seek independent legal advice to fully understand their rights and obligations.