Does the Cream Franchise Agreement specify that the non-compete radius is subject to state law?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
The following provision applies if you or the franchise granted hereby are subject to the franchise laws in Illinois, Indiana, Maryland, Michigan, Minnesota, Virginia, or Wisconsin: No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 44–51)
What This Means (2025 FDD)
According to the 2025 Cream Franchise Disclosure Document, the franchise agreement does not explicitly state that the non-compete radius is subject to state law. However, it does include state-specific riders that modify the agreement based on the jurisdictional requirements of certain states. For instance, there are specific provisions for franchisees in Illinois and Maryland that address compliance with those states' franchise laws. These provisions primarily focus on protecting franchisees' rights and preventing them from waiving claims under state franchise laws.
Specifically, the FDD mentions that if a franchisee is subject to franchise laws in Illinois, Indiana, Maryland, Michigan, Minnesota, Virginia, or Wisconsin, no statement or acknowledgment can waive claims under applicable state franchise law or disclaim reliance on statements made by the franchisor. This suggests that while the core agreement is governed by Ohio law, certain state laws will take precedence where applicable to protect the franchisee.
Prospective Cream franchisees should be aware that the enforceability and interpretation of non-compete clauses can vary significantly by state. While the franchise agreement itself is governed by Ohio law, the state-specific riders indicate that certain state laws, particularly those related to franchise registration and disclosure, will apply if the jurisdictional requirements are met. It would be prudent for potential franchisees to consult with an attorney to understand how the non-compete provisions will be interpreted and enforced in their specific state.