What is the geographic scope of the covenant not to compete for a Cream franchise, in relation to the franchise's premises?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPTS]
If you fail to take any of the actions or refrain from taking any of the actions described above, we may take whatever action and sign whatever documents we deem appropriate on your behalf to cure the deficiencies, including, without liability to you or third parties for trespass or any other claim, to enter the Premises and remove any signs or other materials containing any Marks from your Shop. You must reimburse us for all costs and expenses we incur in correcting any such deficiencies. You hereby appoint us as your true and lawful attorney-in-fact to take such actions and execute such documents on your behalf as may be required to effect the foregoing purposes.
C. COVENANT NOT TO COMPETE.
For two years beginning on the date of termination or expiration of this Agreement, 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) have any direct or indirect interest as an
owner (whether of record, beneficially, or otherwise) in a Competitive Business; (2) lease or sublease the Premises to a Competitive Business; and/or (3) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, in each case, if such Competitive Business is located or operating:
- (i) at the Premises or within a 5-mile radius of the Premises, or
- (ii) within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, the covenant not to compete restricts franchisees and their owners from engaging in or having an interest in a competitive business for two years after the termination or expiration of the franchise agreement. This restriction applies if the competitive business is located or operating at the franchise's premises or within a 5-mile radius of the premises.
In addition to the area around the franchise's premises, the non-compete also extends to a 5-mile radius of any other Jeni's Ice Creams Scoop Shop. This means that franchisees are restricted from operating a competitive business near any other Cream location, not just their own. The agreement also specifies that restricted parties must use their best efforts to prevent their spouses, family members, owners, officers, directors, employees, representatives, affiliates, successors, and assigns from violating the non-compete terms.
This non-compete agreement is triggered by the termination or expiration of the franchise agreement. However, if a person fails to comply with the non-compete obligations at the time of termination or expiration, the two-year restricted period will only begin when they start complying with the terms. This could be the date a court order is issued to enforce the provision. Cream also states that these restrictions apply after any transfer of the franchise, affecting the transferor and their owners for two years from the transfer date, as if the agreement had been terminated for those parties.