How many days does Cream have to provide written notice of its election to purchase the franchisee's business after termination or expiration of the Franchise Agreement?
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. |
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, Cream has the option to purchase the assets of a franchisee's shop upon termination or expiration of the Franchise Agreement. This includes the premises if the franchisee or an affiliate owns it. Cream determines the purchase price based on the net realizable value of the tangible assets, using the liquidation basis of accounting. Cream must provide written notice of its intent to purchase the franchise within 30 days after the termination or expiration of the agreement.
If the franchisee challenges Cream's determined purchase price, an appraiser designated by Cream will determine the final price. The costs and fees for the appraiser are shared equally between Cream and the franchisee. While Cream is deciding whether to purchase the shop, it may operate the shop on an interim basis, as outlined in the Franchise Agreement.
This clause in the Franchise Agreement is important for prospective franchisees to understand. It means that upon termination or expiration of the agreement, Cream has the right to buy the business, potentially impacting the franchisee's ability to sell to another buyer or continue operating independently. The valuation method (net realizable value) may also result in a lower purchase price than other valuation methods. Franchisees should be prepared for the possibility of Cream exercising this option and should understand the financial implications.