What is the Cream franchisee's obligation if there is a material change in the terms of the sale of their franchise?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
If you do not complete the sale to the proposed buyer within 60 days after we notify you that we do not intend to exercise our right of first refusal, or if there is a material change in the terms of the sale (which you agree to tell us promptly), we or our designee will have an additional right of first refusal on the same terms as described above.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 FDD, a Cream franchisee must promptly inform Cream if there is a material change in the terms of the sale of their franchise. If the franchisee fails to do so, Cream or its designee will have an additional right of first refusal. This allows Cream to reassess the sale under the new terms and potentially purchase the franchise themselves or designate another buyer.
This requirement ensures that Cream maintains control over who enters their franchise system and under what conditions a franchise changes hands. By requiring prompt notification of material changes, Cream can protect its brand and ensure that new owners meet their standards. A 'material change' could include alterations to the purchase price, payment terms, or any other significant aspect of the sale agreement.
For a prospective Cream franchisee, this means that transparency and communication with Cream are crucial during any sale process. Failing to disclose changes, even if unintentional, could jeopardize the sale or give Cream an opportunity to step in. Franchisees should consult with a franchise attorney to understand what constitutes a 'material change' in their specific circumstances to ensure they comply with this obligation.