What happens if the party to whom the Cream franchisee's interest is transferred after death or disability is not approved by Cream?
Cream Franchise · 2025 FDDAnswer from 2025 FDD 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. While any decision regarding purchasing your Shop is pending, we may operate your Shop on an interim basis as provided in the Franchise Agreement. | |
| Area Development Agreement | Not Applicable | |
| (p) Death or | Franchise Agreement | Upon death or disability of you or your owners, the estate of such |
| disability of | – Section 12.D | person must transfer all interest in your Shop to a party we |
| franchisee | approve within 180 days following the date of death or disability. If, as a result of the death or incapacity of the transferor, your Shop is not otherwise being managed by a Shopkeeper, a personal representative must appoint a Shopkeeper who we approve and who has completed our then-current Initial Training Program to supervise the day-to-day operations of your Shop within 15 days from the date of death or disability. |
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, in the event of the death or disability of a Cream franchisee or their owners, the estate is required to transfer all interests in the Shop to a Cream-approved party within 180 days. If the shop is not being managed by a Cream-approved Shopkeeper due to the death or incapacity, the personal representative must appoint a Shopkeeper approved by Cream who has completed Cream's Initial Training Program to oversee the shop's daily operations within 15 days of the death or disability.
This requirement ensures that Cream maintains consistent brand standards and operational quality even when the original franchisee is no longer able to manage the business. The 180-day window provides some flexibility for the estate to find a suitable and approved transferee, while the immediate appointment of a Shopkeeper ensures continuity of operations.
For a prospective Cream franchisee, this means having a succession plan in place is crucial. Franchisees should consider who they would want to take over the business in the event of death or disability and ensure that person meets Cream's qualifications and is likely to be approved. Failure to find an approved transferee within the specified timeframe could potentially lead to Cream exercising its rights under the Franchise Agreement, which may include purchasing the business.