Is a Cream franchisee prohibited from being a consultant for a Competitive Business under the terms of the FDD?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
to do all other lawfully permitted acts to further the purposes of this Section with the same legal force and effect as if executed by you.
7. RESTRICTIVE COVENANTS.
A. NON-COMPETITION DURING TERM.
We have granted you the rights in this Agreement in consideration of and reliance upon your agreement to deal exclusively with us. You therefore agree that, during 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, representatives, affiliates, successors and assigns not to):
- (1) have any direct or indirect interest as an owner whether of record, beneficially, or otherwise – in a Competitive Business (defined below), wherever located or operating (except that equity ownership of less than 5% of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this subparagraph);
- (2) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating; or
- (3) divert or attempt to divert any actual or potential business or customer of any Jeni's Ice Creams Scoop Shop to a Competitive Business.
The term "Competitive Business" means any business (excluding any Jeni's Ice Creams Scoop Shop operated under a franchise agreement with us) operating or granting franchises or licenses to others to operate any business for which ice cream, ice cream-based desserts or drinks, and/or other frozen desserts or drinks, or similar products represents more than 10% of the total gross revenue.
B. NON-INTERFERENCE.
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) solicit, interfere, or attempt to interfere with our or our affiliates' relationships with any customers, franchisees, licensees, lenders, suppliers, or consultants.
C. NON-DISPARAGEMENT.
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;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, during the term of the agreement, franchisees are restricted from performing services as a consultant for a Competitive Business. A Competitive Business is defined as any business (excluding any Jeni's Ice Creams Scoop Shop operated under a franchise agreement with Cream) that operates or grants franchises or licenses to others to operate a business where ice cream, ice cream-based desserts or drinks, and/or other frozen desserts or drinks, or similar products represents more than 10% of the total gross revenue. This restriction applies regardless of where the Competitive Business is located or operating.
This non-compete clause ensures that franchisees remain fully committed to Cream and do not use their knowledge or resources to benefit competing businesses during the term of their franchise agreement. This restriction extends not only to the franchisee but also to their owners, current and former spouses, immediate family members, owners, officers, directors, representatives, affiliates, successors, and assigns.
After the franchise agreement terminates or expires, a Cream franchisee is still restricted from performing services as a consultant for a Competitive Business for two years. This applies if the Competitive Business is located within the Development Area or within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop. These restrictions are designed to protect Cream's market share and prevent former franchisees from leveraging their experience to directly compete with the brand in close proximity to existing locations.
Cream also includes continuing obligations that survive the termination or expiration of the franchise agreement, such as non-interference. This means that even after the agreement ends, franchisees must not solicit or interfere with Cream's relationships with customers, franchisees, licensees, lenders, suppliers, or consultants.