What happens if the Cream franchisee challenges the purchase price offered by the franchisor?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
, and related agreements. You should read these provisions in the agreements attached to this Disclosure Document.**
| Provision | Agreement | Summary |
|---|---|---|
| of first refusal, or there is a material change in terms, we will have an additional right of first refusal. | ||
| (o) Franchisor’s | Franchise Agreement | We may purchase any or all of the assets of your Shop (including |
| option to | – Section 15.D | the Premises, if it is owned by you or one of your owners or |
| purchase | affiliates) upon the termination or expiration of the Franchise | |
| franchisee’s | Agreement. The purchase price will be based upon the net | |
| business | realizable value of the tangible assets in accordance with the liquidation basis of accounting. We may exercise this right by giving you written notice of our election within 30 days after the termination or expiration. If challenged, the purchase price will be determined by an appraiser designated by us, with costs and fees shared equally by both parties. |
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, if a franchisee challenges the purchase price offered by Cream upon termination or expiration of the Franchise Agreement, the purchase price will be determined by an appraiser designated by Cream. The costs and fees associated with the appraiser will be shared equally between Cream and the franchisee.
This clause is triggered if Cream exercises its option to purchase the assets of the franchisee's shop, including the premises if owned by the franchisee or its affiliates, upon termination or expiration of the franchise agreement. Cream must provide written notice of its election to purchase within 30 days after the termination or expiration of the agreement. The purchase price will be based on the net realizable value of the tangible assets, determined according to the liquidation basis of accounting.
While the decision regarding the purchase of the shop is pending, Cream has the right to operate the shop on an interim basis, as outlined in the Franchise Agreement. This arrangement ensures continuity of the business during the transition period. The franchisee should be aware of the potential for Cream to control operations during this interim phase, even while the purchase price is under dispute.
This process is fairly standard in franchising, where the franchisor often has the right to repurchase the franchise upon termination to maintain brand consistency. The provision for an independent appraiser, with costs shared equally, aims to provide a fair mechanism for resolving disputes over valuation. However, the franchisee should carefully consider the implications of allowing Cream to designate the appraiser, even with the cost-sharing arrangement.