What kind of title must the franchisee deliver to Cream for the purchased assets of the Shop?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
Closing of the purchase will take place, as described below, on a date we select which is within 90 days after determination of the purchase price in accordance with this Section 15.D, although we or our designee may decide after the purchase price is determined not to purchase your Shop and/or the Premises. At the closing, you agree to deliver to us or our designee: (1) an asset purchase agreement and other agreements in the form we dictate, which provide customary warranties and representations, including representations and warranties as to ownership and condition of and title to assets; liens and encumbrances on assets; validity of contracts and agreements; and liabilities affecting the assets, contingent or otherwise; (2) good and merchantable title to the assets purchased, free and clear of all liens and encumbrances (other than liens and security interests acceptable to us), with all taxes paid by you, including sales, goods and services, harmonized sales, use, value added, retailer's excise, or similar taxes; (3) any and all of your Shop's licenses and permits which may be assigned or transferred; (4) the ownership interest or leasehold interest (as applicable, if we determine) in the Premises and improvements or a lease assignment or lease or sublease, as applicable; and (5) an agreement, in form and substance satisfactory to us, voluntarily terminating this Agreement, under which you agree to
comply with all post-term obligations under this Agreement, and that you and your owners agree to a general release of any and all claims (except for claims which cannot be released or waived pursuant to an applicable franchise statute) against us and our owners, affiliates, officers, directors, employees, agents, successors, and assigns. If you cannot deliver clear title to all of the purchased assets, or if there are other unresolved issues, we and you will close the sale through an escrow.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 FDD, if Cream or its designee decides to purchase a Cream shop, the franchisee must deliver a good and merchantable title to the assets purchased. This title must be free and clear of all liens and encumbrances, except for those acceptable to Cream.
Furthermore, the franchisee is responsible for ensuring that all taxes related to the assets are paid, including sales, goods and services, harmonized sales, use, value added, retailer's excise, or similar taxes. The closing of the purchase will occur on a date selected by Cream, within 90 days after the purchase price is determined. However, Cream retains the right to decide not to purchase the shop and/or the premises even after the purchase price has been determined.
If the franchisee cannot provide a clear title to all purchased assets or if there are unresolved issues, the sale will proceed through an escrow account. This ensures that funds and assets are held securely until all conditions of the sale are met, protecting both Cream and the franchisee during the transfer process.