Who is the Cream Franchise Agreement binding upon, besides Cream and the franchisee?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
to do all other lawfully permitted acts to further the purposes of this Section with the same legal force and effect as if executed by you.
7. RESTRICTIVE COVENANTS.
A. NON-COMPETITION DURING TERM.
We have granted you the rights in this Agreement in consideration of and reliance upon your agreement to deal exclusively with us. You therefore agree that, during the Term, you and your owners agree not to (and to use each of your best efforts to cause each of your respective current and former spouses, immediate family members, owners, officers, directors, representatives, affiliates, successors and assigns not to):
- (1) have any direct or indirect interest as an owner whether of record, beneficially, or otherwise – in a Competitive Business (defined below), wherever located or operating (except that equity ownership of less than 5% of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this subparagraph);
- (2) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating; or
- (3) divert or attempt to divert any actual or potential business or customer of any Jeni's Ice Creams Scoop Shop to a Competitive Business.
The term "Competitive Business" means any business (excluding any Jeni's Ice Creams Scoop Shop operated under a franchise agreement with us) operating or granting franchises or licenses to others to operate any business for which ice cream, ice cream-based desserts or drinks, and/or other frozen desserts or drinks, or similar products represents more than 10% of the total gross revenue.
B. NON-INTERFERENCE.
During and after the Term, you and your owners agree not to (and to use each of your best efforts to cause each of your respective current and former spouses, immediate family members, owners, officers, directors, employees, representatives, affiliates, successors and assigns not to) solicit, interfere, or attempt to interfere with our or our affiliates' relationships with any customers, franchisees, licensees, lenders, suppliers, or consultants.
C. NON-DISPARAGEMENT.
During and after the Term, you and your owners agree not to (and to use each of your best efforts to cause each of your respective current and former spouses, immediate family members, owners, officers, directors, employees, representatives, affiliates, successors, and assigns not to): (1) disparage or otherwise speak or write negatively, directly or indirectly, of us, our affiliates, any of our or our affiliates' directors, officers, employees, representatives or affiliates, current and former franchisees of us or our affiliates, the Jeni's® brand, the System, any Jeni's Ice Creams Scoop Shop, any business using the Marks, or any other brand concept operated, licensed, or franchised by us or our affiliates; or (2) take any other action which would, directly or indirectly, subject any of the foregoing to ridicule, scandal, reproach, scorn, or indignity, or which would negatively impact or injure the goodwill of the System or the Marks. Notwithstanding anything to the contrary, in no event will you be prohibited from providing truthful testimony in connection with a legal proceeding or governmental investigation.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 FDD, the Cream franchise agreement has implications and is binding not only on the franchisee but also on other parties connected to the franchisee. Specifically, during the term of the agreement, the restrictive covenants apply to the franchisee's owners, their current and former spouses, immediate family members, officers, directors, representatives, affiliates, successors, and assigns. These related parties are restricted from engaging in competitive businesses or interfering with Cream's relationships with its customers, franchisees, lenders, suppliers, or consultants.
After the term of the agreement, the non-interference clause continues to bind the franchisee and the same group of related parties. This means that even after the franchise agreement expires or is terminated, these individuals and entities must not solicit or interfere with Cream's business relationships. This extended obligation is designed to protect Cream's established network and goodwill.
Furthermore, if the franchisee leases the premises for their Cream shop, the landlord also has obligations that affect the franchise agreement. The landlord acknowledges the franchise relationship and agrees not to take actions that would prevent the franchisee from operating the Cream shop as outlined in the franchise agreement. The landlord also consents to the collateral assignment of the lease to Cream, which secures the franchisee's obligations to Cream. Cream is also considered a third-party beneficiary of the lease terms applicable to Cream's rights, allowing Cream to enforce those terms directly. These lease-related provisions ensure that Cream has certain protections and rights related to the physical location of the franchise.