Does the non-competition agreement for a Cream franchise extend to the franchisee's immediate family members?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
to do all other lawfully permitted acts to further the purposes of this Section with the same legal force and effect as if executed by you.
7. RESTRICTIVE COVENANTS.
A. NON-COMPETITION DURING TERM.
We have granted you the rights in this Agreement in consideration of and reliance upon your agreement to deal exclusively with us. You therefore agree that, during the Term, you and your owners agree not to (and to use each of your best efforts to cause each of your respective current and former spouses, immediate family members, owners, officers, directors, representatives, affiliates, successors and assigns not to):
- (1) have any direct or indirect interest as an owner whether of record, beneficially, or otherwise – in a Competitive Business (defined below), wherever located or operating (except that equity ownership of less than 5% of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this subparagraph);
- (2) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating; or
- (3) divert or attempt to divert any actual or potential business or customer of any Jeni's Ice Creams Scoop Shop to a Competitive Business.
The term "Competitive Business" means any business (excluding any Jeni's Ice Creams Scoop Shop operated under a franchise agreement with us) operating or granting franchises or licenses to others to operate any business for which ice cream, ice cream-based desserts or drinks, and/or other frozen desserts or drinks, or similar products represents more than 10% of the total gross revenue.
B. NON-INTERFERENCE.
During and after the Term, you and your owners agree not to (and to use each of your best efforts to cause each of your respective current and former spouses, immediate family members, owners, officers, directors, employees, representatives, affiliates, successors and assigns not to) solicit, interfere, or attempt to interfere with our or our affiliates' relationships with any customers, franchisees, licensees, lenders, suppliers, or consultants.
C.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, the non-competition agreements extend to the franchisee's immediate family members. During the term of the agreement, the franchisee must use their best efforts to ensure that their current and former spouses, immediate family members, owners, officers, directors, representatives, affiliates, successors, and assigns do not engage in competitive business activities. These restrictions include not having a direct or indirect interest in a Competitive Business, performing services for a Competitive Business, or diverting business from a Jeni's Ice Creams Scoop Shop to a Competitive Business. A Competitive Business is defined as any business (excluding other Jeni's Ice Creams Scoop Shops) where ice cream or similar products represent more than 10% of total gross revenue.
Following the termination or expiration of the franchise agreement, the franchisee and the aforementioned related parties are restricted from involvement with a Competitive Business for two years. This restriction applies if the Competitive Business is located within the Development Area or within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop. The agreement specifies that if any restricted person fails to comply, the two-year period starts when they begin to comply, potentially after a court order is issued.
Cream emphasizes that these restrictions will not deprive the franchisee of their ability to earn a living, as they possess general skills and abilities. The non-competition obligations, along with those related to non-disparagement and non-interference, remain in effect even after the agreement expires or terminates. This ensures the continued protection of Cream's business interests and goodwill. Prospective franchisees should carefully consider these extended obligations and how they might impact their family members before investing in a Cream franchise.