What is the geographic scope of the Cream non-competition covenant after termination or expiration of the Area Development Agreement?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
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; and/or (2) 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:
- (a) within the Development Area, or
- (b) within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop.
If any person restricted by this Section fails to comply with these obligations as of the date of termination or expiration, the two-year restricted period for that person will commence on the date the person begins to comply with this Section, which may be the date a court order is entered enforcing
this provision. You and your owners expressly acknowledge that you possess skills and abilities of a general nature and have other opportunities for exploiting these skills. Consequently, our enforcing the covenants made in this Section will not deprive you of your personal goodwill or ability to earn a living. The restrictions in this Section will also apply after any transfer, to the transferor and its owners, for a period of two years beginning on the effective date of the transfer, with the force and effect as though this Agreement had been terminated for such parties as of such date.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 44–51)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, for two years after the Area Development Agreement terminates or expires, the franchisee and their owners are restricted from having an interest in or working for a Competitive Business. This restriction applies if the Competitive Business is located or operating within the Development Area or within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop.
This non-compete obligation extends not only to the franchisee and their owners but also to their current and former spouses, immediate family members, owners, officers, directors, employees, representatives, affiliates, successors, and assigns. The FDD states that if any of these restricted individuals fail to comply with the non-compete terms, the two-year restriction period will begin when they start complying, potentially starting from the date a court order is issued to enforce the provision.
Cream emphasizes that the franchisee's skills are general and that enforcing the non-compete will not deprive them of their personal goodwill or ability to earn a living. The restrictions also apply to any transfer of the Area Development Agreement, with the two-year period beginning on the effective date of the transfer, as if the agreement had been terminated on that date.