Does the Cream franchise agreement create a fiduciary relationship between the franchisor and franchisee?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
6. 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, vendors, public officials, your personnel, and others as the sole holder of the Development Rights 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, or 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 exercise of your Development Rights or the business you conduct under this Agreement. We will have no liability for your obligations to pay any third parties, including any product Vendors.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 FDD, the Cream franchise agreement explicitly states that it does not create a fiduciary relationship between the franchisor and the franchisee. The agreement specifies that Cream and its franchisees are independent contractors. Furthermore, the agreement clarifies that neither party is considered a general or special agent, joint venturer, partner, or employee of the other for any purpose.
This distinction is important because it means that Cream does not owe the franchisee the same level of legal duty that would be required in a fiduciary relationship. Fiduciary duties typically include acting in the best interest of the other party, disclosing relevant information, and avoiding conflicts of interest. Since the Cream franchise agreement disclaims a fiduciary relationship, franchisees should be aware that their relationship with Cream is primarily contractual and governed by the terms of the franchise agreement.
The agreement also requires franchisees to identify themselves as independent owners in all dealings with customers, vendors, and other parties. This reinforces the independent nature of the franchise operation and helps to avoid any confusion about the relationship between the franchisee and Cream. Franchisees acknowledge that their contractual relationship is solely with Cream and not with its affiliates, designees, officers, directors, employees, or other representatives or agents.
Cream and its franchisees are restricted from making any agreements, warranties, or representations on behalf of each other, and neither party is responsible for the debts or obligations of the other. This further emphasizes the independent nature of the relationship and limits the liability of Cream for the actions of its franchisees. Franchisees should understand that they are responsible for their own business operations and obligations, and Cream is not liable for any damages arising from the franchisee's business.