If Cream is acquired, will the acquirer have the right to continue to establish and operate such businesses within a franchisee's protected territory?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
- (6) be acquired by or acquire (regardless of the form of transaction(s)), any other business, including businesses that operate or allow others to establish and operate businesses similar to, the same, or competitive with Jeni's Ice Creams Scoop Shops, at any location in the world, including in the Protected Territory (and in the event of such an acquisition, we and/or the acquirer and its affiliates will have the right to continue to establish and operate, and authorize others to establish and operate, such businesses, at any location in the world, including in the Protected Territory); and
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, if Cream is acquired by another business, the acquirer has the right to continue establishing and operating businesses, including those similar to or competitive with Cream shops, anywhere in the world, even within a franchisee's protected territory. This right extends to the acquirer's affiliates as well. This clause remains in effect regardless of the form of the transaction.
This means that a Cream franchisee's protected territory is not safe from competition if Cream is acquired. The new owner could potentially establish competing businesses within the franchisee's exclusive area, impacting their revenue and market share. This is a significant risk factor for prospective franchisees to consider.
This condition is not uncommon in franchising, as it allows the franchisor flexibility in the event of a sale or merger. However, it is crucial for franchisees to understand that their protected territory is subject to this exception. Prospective franchisees should carefully evaluate the potential impact of such a clause on their investment and profitability. They may want to seek legal counsel to fully understand the implications before signing the franchise agreement.