Does the Cream franchise agreement's non-disparagement clause prevent a franchisee from reporting a suspected violation of law to a governmental agency?
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): (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. 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 reporting a suspected violation of law to a governmental agency. The non-disparagement clause generally restricts franchisees from making negative statements about Cream, its affiliates, and the Cream system. However, there are explicit exceptions to this clause.
Specifically, the franchise agreement states that nothing in the agreement prohibits a franchisee from reporting a suspected violation of law to the appropriate governmental agency or authority. This ensures that franchisees can report potential illegal activities without fear of being penalized for violating the non-disparagement clause. This protection extends to providing truthful testimony in connection with a legal proceeding or governmental investigation.
This type of clause is fairly common in franchise agreements to protect the brand's reputation while also ensuring compliance with the law. Prospective Cream franchisees should note this provision as a positive aspect of the franchise agreement, as it allows them to fulfill their legal and ethical obligations without risking breach of contract.