If a person fails to comply with the Cream non-compete agreement, when does the restricted period begin?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
| If any person restricted by this Section 15.C fails to comply with these obligations as of the | |
|---|---|
| date of termination or expiration, the two-year restricted period for that person will commence on the | |
| date the person begins to comply with this Section 15.C, which may be the date a court order is entered | |
| enforcing this provision. You and your owners expressly acknowledge that you possess skills and | |
| abilities of a general nature and have other opportunities for exploiting these skills. Consequently, our | |
| enforcing the covenants made in this Section 15.C will not deprive you of your personal goodwill or |
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 FDD, if a person fails to comply with the non-compete obligations outlined in Section 15.C of the Cream franchise agreement as of the date of termination or expiration of the agreement, the two-year restricted period for that person will commence on the date the person begins to comply with Section 15.C. This may be the date a court order is entered enforcing this provision.
This means that the two-year clock on the non-compete doesn't start ticking until the franchisee actually stops violating the agreement. This could be significantly later than the termination date if the franchisee continues to operate a competing business. The start date for the non-compete period could be the date of a court order if Cream has to take legal action to enforce the non-compete agreement.
Cream emphasizes that franchisees possess general skills and abilities and have other opportunities to earn a living. Therefore, Cream believes that enforcing the non-compete will not deprive franchisees of their personal goodwill or ability to earn a living. The restrictions also apply to transferors and their owners for two years from the transfer date, as if the agreement was terminated on that date.