What is the geographic scope of the Cream non-competition covenant during the term of the Area Development Agreement?

According to the 2025 FDD, Cream's Area Development Agreement includes a non-competition covenant that restricts the franchisee from engaging in competitive business activities during the term of the agreement. Specifically, the franchisee agrees not to have any direct or indirect interest in a Competitive Business, wherever located or operating. The franchisee also agrees not to perform services for a Competitive Business, wherever located or operating, and not to divert or attempt to divert any actual or potential business or customer of any Jeni's Ice Creams Scoop Shop to a Competitive Business. A Competitive Business is defined as any business (excluding any Jeni's Ice Creams Scoop Shop operated under a franchise agreement with us) operating or granting franchises or licenses to others to operate any business for which ice cream, ice cream-based desserts or drinks, and/or other frozen desserts or drinks, or similar products represents more than 10% of the total gross revenue. An exception exists for equity ownership of less than 5% of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange.

This non-competition covenant applies to the franchisee and their owners, as well as their respective current and former spouses, immediate family members, owners, officers, directors, representatives, affiliates, successors, and assigns. This broad scope ensures that all related parties are bound by the non-competition agreement, preventing any potential circumvention of the restrictions. The geographic scope of the non-competition covenant during the term of the Area Development Agreement is 'wherever located or operating'.

This means that during the term of the Area Development Agreement, Cream franchisees are restricted from owning or working for a competitive business anywhere, unless they own less than 5% of a publicly traded company. This is a significant restriction that could impact a franchisee's ability to pursue other business ventures during the term of their agreement. Prospective franchisees should carefully consider this restriction and how it might affect their future plans before entering into an Area Development Agreement with Cream.