What happens if the transferee does not meet Cream's requirements?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
We will approve a transfer if all of the following requirements are met:
- (1) you submit an application in writing requesting our consent and providing us all information or documents we request about the transferee and its owners that we request to evaluate their ability to satisfy their respective obligations under our then-current form of Franchise Agreement and any documents ancillary thereto, and each such person must have completed and satisfied all of our application and certification requirements, including the criteria that neither the transferee nor its owners (if the transferee is an Entity) or affiliates have an ownership interest in or perform services for a Competitive Business;
- (2) you and your owners have not violated any provision of this Agreement or any other agreement with us or our affiliates during both the 60-day period before you requested our consent to the transfer and the period between your request and the effective date of the transfer;
- (3) you provide us executed versions of any documents executed by you (or your owners) and transferee (and its owners) to effect the transfer, and all other information we request about the proposed transfer, and such transfer meets all of our requirements, including terms, closing date, purchase price, amount of debt, and payment terms, and we have determined that the purchase price and other terms of the transfer will not adversely affect the transferee's fulfillment of your Development Rights;
- (4) you (and your owners) and the transferee (and its owners) sign all of the documents we are then requiring in connection with a transfer, in a form satisfactory to us, including: (i) a release of any and all claims (except for claims which cannot be released or
waived pursuant to applicable law) against us and our affiliates and our and their owners, officers, directors, employees, and agents, and (ii) covenants that you and your transferring owners agree to satisfy all post-termination obligations under this Agreement;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
Based on the 2025 FDD, Cream outlines several conditions that must be met for a transfer to be approved. These conditions cover various aspects, including the transferee's qualifications, the franchisee's compliance with the agreement, and the terms of the transfer itself.
Specifically, the transferee must meet Cream's application and certification requirements, ensuring they don't have an ownership interest in a competitive business. The franchisee must also be in good standing, having complied with all agreements and paid all dues. The transfer terms, including the purchase price, must not adversely affect the operation of the Cream shop. Both parties must sign required documents, including releases of claims. The transferee needs to complete the training program, and the shop must meet Cream's standards, potentially requiring upgrades or remodeling.
If these requirements are not met, Cream will not approve the transfer. This means the current franchisee will not be able to sell or transfer their Cream franchise to the proposed transferee. The franchisee would need to find another transferee who meets all of Cream's requirements or address any deficiencies to bring the shop into compliance before a transfer can be approved. This protects Cream's brand standards and ensures that new franchisees are qualified and capable of operating a successful franchise.