Does Cream franchisor have liability for the Cream franchisee's obligations to pay third parties, including product vendors?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
We and you may not make any express or implied agreements, warranties, guarantees, or representations, or incur any debt, in the name or on behalf of the other or represent that our respective relationship is other than franchisor and franchise owner. We will not be obligated for any damages to any person or property directly or indirectly arising out of the exercise of your Development Rights or the business you conduct under this Agreement. We will have no liability for your obligations to pay any third parties, including any product Vendors.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, Cream is not liable for the franchisee's obligations to third parties, including product vendors. The franchise agreement specifies that the relationship between Cream and its franchisees is that of independent contractors. This means neither party can incur debt or make agreements on behalf of the other.
Cream franchisees are responsible for their own debts and obligations. This is a common arrangement in franchising, where franchisees operate their businesses independently and are responsible for managing their own finances and vendor relationships. The FDD states that Cream "will have no liability for your obligations to pay any third parties, including any product suppliers."
This lack of liability extends to damages or other issues arising from the franchisee's operations. Franchisees must identify themselves as independent owners in all dealings with customers, vendors, and other parties. This reinforces the separation between Cream and its franchisees, ensuring that franchisees are directly accountable for their own business activities and financial obligations.
Prospective Cream franchisees should understand that they are solely responsible for paying their own bills, including those from product vendors. This arrangement protects Cream from being held liable for the debts and actions of its franchisees, which is a typical provision in franchise agreements.