For the Cream franchise, if a person restricted by the agreement fails to comply with their obligations, when does the two-year restricted period begin?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
If any person restricted by this Section 15.C fails to comply with these obligations as of the date of termination or expiration, the two-year restricted period for that person will commence on the date the person begins to comply with this Section 15.C, which may be the date a court order is entered enforcing this provision. You and your owners expressly acknowledge that you possess skills and abilities of a general nature and have other opportunities for exploiting these skills. Consequently, our enforcing the covenants made in this Section 15.C will not deprive you of your personal goodwill or ability to earn a living. The restrictions in this Section 15.C will also apply after any transfer, to the transferor and its owners, for a period of two years beginning on the effective date of the transfer, with the force and effect as though this Agreement had been terminated for such parties as of such date.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, the two-year restricted period for individuals bound by the non-compete agreement begins on the date they start complying with its terms. This applies if they initially fail to comply with their obligations as of the termination or expiration date of the franchise agreement.
This means that if a franchisee or related party violates the non-compete immediately after the agreement ends, the clock on the two-year restriction doesn't start until they cease the violating activity. The start of compliance could also be the date a court order is issued to enforce the non-compete provision, indicating that legal action might be necessary to ensure compliance.
This clause provides Cream with a mechanism to ensure that franchisees and related parties adhere to the non-compete obligations, even if there is an initial period of non-compliance. It also motivates the franchisee to comply promptly to minimize the length of the restricted period. This is a fairly standard practice in franchising to protect the brand's market presence and confidential information.