If a Cream franchisee dies, does the Area Development Agreement dictate who the ownership interests can be transferred to?
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. | |
| Area Development | Neither the Area Development Agreement nor any ownership | |
| Agreement – Section | interests in you may be transferred without our prior written | |
| 5.C | consent. |
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, the Area Development Agreement does not specify who ownership interests can be transferred to upon the death of a franchisee. However, the document states that neither the Area Development Agreement nor any ownership interests in the franchisee can be transferred without Cream's prior written consent.
This means that if a Cream franchisee dies, their estate cannot automatically transfer the Area Development Agreement or ownership interests to a designated heir or beneficiary. The estate must seek Cream's written approval for any transfer. Cream has the right to deny the transfer if they do not approve of the proposed transferee.
This provision protects Cream by ensuring that any new area developer meets their standards and qualifications. For a prospective franchisee, this highlights the importance of succession planning and discussing transfer options with Cream to ensure a smooth transition in the event of death or disability. The franchisee should clarify with Cream what criteria they will use to evaluate potential transferees in such a situation.