If Cream is acquired by another business, can the acquiring business continue to operate businesses that compete with Jeni's Ice Creams Scoop Shops 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 12 — TERRITORY (FDD pages 35–39)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, if Cream is acquired by another business, the acquiring business has the right to continue operating businesses that are similar to, the same as, or competitive with Jeni's Ice Creams Scoop Shops, even within a franchisee's protected territory. This is regardless of the transaction's form. The acquirer and its affiliates can continue to establish and operate such businesses or authorize others to do so anywhere in the world, including within the protected territory.
This clause significantly impacts a Cream franchisee because it means that even with a protected territory, the protection is not absolute against competition from an acquiring company. A franchisee could find themselves competing with other ice cream shops owned by the company that acquired Cream, even if those shops are under a different brand. This could dilute the franchisee's market share and potentially reduce profitability.
This condition is a notable risk for potential Cream franchisees. While the franchise agreement may grant a protected territory, this protection is subject to the significant exception of potential acquisitions. Franchisees need to be aware that their protected territory could effectively be nullified if Cream is acquired by a larger entity that already operates competing businesses. This is a fairly common clause in franchise agreements, as it protects the franchisor's (and any future owner's) flexibility and growth potential.
Prospective franchisees should carefully consider this risk and evaluate the likelihood of Cream being acquired in the future. They should also assess the potential impact of such a scenario on their business and profitability. It would be prudent to discuss this specific clause with Cream's current franchisees to understand their perspective and experiences, and to seek legal counsel to fully understand the implications of this clause.