What is the Cream franchisee required to covenant regarding post-termination obligations upon transfer?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
- (4) you (and your owners) and the transferee (and its owners) sign all of the documents we are then requiring in connection with a transfer, in a form satisfactory to us, including: (i) a release of any and all claims (except for claims which cannot be released or waived pursuant to applicable law) against us and our affiliates and our and their owners, officers, directors, employees, and agents, and (ii) covenants that you and your transferring owners agree to satisfy all post-termination obligations under this Agreement;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, as a condition of transfer, a franchisee and their transferring owners must covenant to satisfy all post-termination obligations under the Franchise Agreement. This means that even after the franchise is transferred to a new owner, the original franchisee and their owners remain responsible for fulfilling any obligations that survive the termination of the agreement.
These post-termination obligations, as detailed in the FDD, include non-disparagement, non-competition, non-interference, confidentiality, information security, and indemnification. The non-compete clause, for example, restricts the franchisee and their owners from engaging in a Competitive Business within the Development Area or a 5-mile radius of any Jeni's Ice Creams Scoop Shop for two years after termination or expiration of the agreement.
This requirement ensures that Cream maintains its brand standards and protects its interests even after a franchise changes ownership. Prospective franchisees should carefully review the post-termination obligations outlined in the Franchise Agreement to understand the full extent of their responsibilities, even after transferring the franchise.