Does the Cream franchise agreement's non-disparagement clause prevent a franchisee from providing truthful testimony in a legal proceeding?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
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) 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 or developers of us or our affiliates, the Jeni's ® brand, the System, any Jeni's Ice Creams Scoop Shop, any other brand or service-marked or trademarked concept operated or franchised by us or our affiliates, or 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. 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. In addition, nothing in this Agreement shall prohibit you from reporting a suspected violation of law to the appropriate governmental agency or authority.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, the franchise agreement's non-disparagement clause does not prevent a franchisee from providing truthful testimony in a legal proceeding or governmental investigation. The clause aims to prevent franchisees and related parties from disparaging Cream, its affiliates, directors, officers, employees, representatives, current and former franchisees, the brand, the system, or any other brand concept operated or franchised by Cream. It also seeks to prevent actions that could subject these entities to ridicule or negatively impact their goodwill.
However, the non-disparagement clause explicitly states that it does not prohibit franchisees from providing truthful testimony in connection with a legal proceeding or governmental investigation. This ensures that franchisees can fulfill their legal obligations to provide accurate information when required by law, without fear of being penalized by Cream for violating the non-disparagement clause.
Furthermore, the agreement specifies that franchisees are not prohibited from reporting suspected violations of law to the appropriate governmental agency or authority. This provision protects franchisees who report illegal activities, ensuring they can come forward without facing repercussions from Cream under the non-disparagement clause. This is a fairly standard practice in franchising, as franchisors generally cannot prevent franchisees from complying with the law or participating in legal proceedings.