Does the Cream franchise agreement allow for the transfer of ownership interest in the franchisee entity?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
t efforts to promote and operate your Shop from and after the Opening Date on a continuous basis for the entirety of the Term.
C. IF YOU ARE AN ENTITY.
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.
You must identify on Attachment A one of your owners who is a natural person and who will have authority and signatory power on behalf of you (the "Principal Owner"). You must obtain our written consent prior to changing the Principal Owner and agree to deliver to us a revised Attachment A to accurately identify the Principal Owner should the identity of that person change during the Term as permitted hereunder. You agree that the Principal Owner is authorized, on your behalf, to deal with us in respect of all matters whatsoever which may arise in respect of this Agreement. Any decision made by the Principal Owner will be final and binding upon you, and we will be entitled to rely solely upon the decision of the Principal Owner in any such dealings without the necessity of any discussions with any other person, and we will not be held liable for any actions taken by you or otherwise, based upon any decision or actions of the Principal Owner. You represent and agree that the person acting as your Principal Owner has full power and authority to enter into this Agreement and any other documents to which you are a party, and to make binding decisions on your behalf.
D. PREMISES OF YOUR SHOP.
Other than off-Premises services we have approved (as described in Section 8.C), you may operate your Shop only at the specific location identified on Attachment C (the "Premises"). If the Premises have not been approved when you sign this Agreement, you must select a site in the Site Selection Area (as described in Section 2.A below). You agree to use the Premises only for your Shop and no other activities or business of any kind without our express approval. You agree not to conduct the business of your Shop at any location other than the Premises.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 FDD, the Cream franchise agreement addresses the transfer of ownership interests in a franchisee entity. If the franchisee is an entity, such as a corporation, LLC, or partnership, it must maintain organizational documents that reflect restrictions on the issuance and transfer of ownership interests as described in the franchise agreement. All certificates and documents representing ownership interests must also bear a legend referring to these restrictions.
Cream requires that Attachment A to the franchise agreement accurately describes all owners and their interests as of the effective date. Any owner with a 10% or greater ownership interest in the franchisee entity must execute a personal guarantee, binding them to the franchise agreement. Franchisees must update Attachment A to reflect any permitted changes in ownership, subject to Cream's rights and the franchisee's obligations under Section 12 of the agreement.
Furthermore, the FDD outlines specific conditions for transferring the franchise agreement to a wholly-owned entity. If the franchisee did not originally sign the agreement as an entity, they may transfer it to one, provided that the entity's business is limited to operating the Cream shop(s), the franchisee maintains management control, and they own 100% of the entity's economic interests and voting power. The franchisee must also meet all conditions applicable to a transfer as described in Section 12.C, except for the transfer fee and the franchisor's right of first refusal. The entity must assume all obligations under the agreement, and the franchisee remains personally liable, including signing a personal guaranty. The franchisee must also sign a consent to assignment and assignment form that is satisfactory to Cream, which may include a release of claims against Cream and its affiliates.