If a Cream franchisee asks Cream to evaluate a proposed alternative supplier, what financial obligation does the franchisee have?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
If you ask us to evaluate any proposed alternative suppliers, you must reimburse all of our costs and expenses for such evaluation. We may revoke our approval of any vendor at any time by providing written notice to you. You may not contract with any alternative vendors without receiving our prior approval.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 22–24)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, if a franchisee requests that Cream evaluate a proposed alternative supplier, the franchisee must reimburse Cream for all costs and expenses associated with the evaluation. This means that beyond the time and effort required to find and propose a new supplier, the franchisee will also bear the financial burden of Cream's review process.
This requirement has significant implications for a prospective Cream franchisee. It means that franchisees cannot freely switch suppliers to find better deals or more suitable products. Cream maintains control over the supply chain, and franchisees must be prepared to pay for the privilege of suggesting alternatives. This could discourage franchisees from seeking out potentially beneficial suppliers if they are concerned about the evaluation costs.
Cream also retains the right to refuse to consider or approve any alternative vendor for any reason. Even if a franchisee is willing to pay for the evaluation, there is no guarantee that Cream will approve the proposed supplier. Cream estimates that they will provide notice of their decision within 30 days of receiving the request and all necessary materials for evaluation. This further emphasizes Cream's control over its supply chain and the potential costs and limitations faced by franchisees.
In the franchise industry, it is common for franchisors to have approved supplier lists to maintain quality and consistency. However, the requirement for franchisees to reimburse the franchisor's evaluation costs for alternative suppliers is not always standard. Prospective franchisees should carefully consider these costs and limitations when evaluating the Cream franchise opportunity.