Does the general release agreement for Cream cover rights to terminate or rescind the franchise agreement?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
You and your owners, jointly and severally, on behalf of themselves and their spouses and immediate family members, and each such foregoing person's or entity's respective affiliates, employees, owners, officers, directors, successors, assigns, spouses and immediate family members (the "Releasing Parties") hereby fully and forever unconditionally release and discharge us and our current and former affiliates, parents, subsidiaries, franchisees, area developers, owners, agents, insurers and our and their respective affiliates, employees, officers, directors, successors, assigns, owners, guarantors and other representatives (the "Franchisor Parties"), of and from any and all claims, obligations, debts, proceedings, demands, causes of action, rights to terminate and rescind, liabilities, losses, damages, and rights of every kind and nature whatsoever, and known or unknown, suspected or unsuspected, whether at law or in equity, which any of them has, had, or may have against any of the Franchisor Parties, from the beginning of time to the date of this document (together, Claims"), including any and all Claims in any way arising out of or relating to the Agreement or the relationship of the Releasing Parties with any of the Franchisor Parties. You and your owners, on your own behalf and the other Releasing Parties, further covenant not to sue any of the Franchisor Parties on any of the Claims released by this paragraph and represent that you have not assigned any of the Claims released by this paragraph to any individual or entity.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 FDD, the general release agreement for Cream includes a release of "rights to terminate and rescind". This means that when signing the general release, a franchisee agrees to give up any existing or future claims or rights to end the franchise agreement early or cancel it altogether. This waiver extends to all claims, known or unknown, that the franchisee may have against Cream.
Cream requires this general release from franchisees and their owners in several circumstances, most notably when renewing their franchise agreement. By signing this release, the franchisee essentially agrees not to sue Cream for any reason related to the franchise agreement or their relationship with the company. This can significantly limit a franchisee's legal options if disputes arise during the franchise term or upon termination.
However, the FDD also notes some exceptions. For example, if the franchised business is in Maryland or the franchisee is a resident of Maryland, the general release does not apply to liabilities under the Maryland Franchise Registration and Disclosure Law. Similarly, Minnesota law prohibits Cream from enforcing releases that waive rights under Minnesota Statutes, Chapter 80C, or that limit access to procedures, forums, or remedies provided by law. Franchisees in California are required to acknowledge that they are relinquishing claims they may not even be aware of, including rights under Section 1542 of the California Civil Code, which typically protects against unknowingly releasing claims.
Prospective Cream franchisees should carefully review the general release agreement with legal counsel to fully understand the scope of the rights they are waiving and the potential implications for their business. They should also be aware of any state-specific protections that may limit the enforceability of the release.