What is the Cream franchisee Entity's obligation regarding its legal standing throughout the term of the Cream franchise agreement?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are a corporation, limited liability company, or partnership (each, an "Entity"), you represent that you have the authority to execute, deliver, and perform your obligations under this Agreement and all related agreements and are duly organized or formed. You agree to remain validly existing and in good standing under the laws of the state of your formation throughout the Term. You agree to maintain organizational documents, including your operating agreement or partnership agreement, as applicable, that reflect the restrictions on issuance and transfer of any ownership interests
in you described in this Agreement, and all certificates and other documents representing ownership interests in you will bear a legend referring to this Agreement's restrictions.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, if a franchisee is an entity such as a corporation, limited liability company, or partnership, it must maintain a valid legal standing throughout the term of the franchise agreement. This means the franchisee entity must remain validly existing and in good standing under the laws of the state where it was formed.
This obligation ensures that the Cream franchisee is legally authorized to conduct business and fulfill its obligations under the franchise agreement. Maintaining good standing typically involves complying with state requirements for registration, reporting, and payment of fees. Failure to do so could result in the entity being dissolved or losing its legal right to operate, which would be a breach of the franchise agreement.
Furthermore, the franchisee must maintain organizational documents, such as operating agreements or partnership agreements, that reflect any restrictions on the issuance and transfer of ownership interests as outlined in the franchise agreement. All certificates and documents representing ownership interests must also include a reference to these restrictions. This requirement helps Cream control and monitor changes in ownership, ensuring compliance with the franchise agreement's terms regarding ownership and transfer.