Does the non-competition clause in the Cream franchise agreement apply to current and former spouses of the franchisee?
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. NON-DISPARAGEMENT.
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): (1) disparage or otherwise speak or write negatively, directly or indirectly, of us, our affiliates, any of our or our affiliates' directors, officers, employees, representatives or affiliates, current and former franchisees of us or our affiliates, the Jeni's® brand, the System, any Jeni's Ice Creams Scoop Shop, any business using the Marks, or any other brand concept operated, licensed, or franchised by us or our affiliates; or (2) take any other action which would, directly or indirectly, subject any of the foregoing to ridicule, scandal, reproach, scorn, or indignity, or which would negatively impact or injure the goodwill of the System or the Marks. Notwithstanding anything to the contrary, in no event will you be prohibited from providing truthful testimony in connection with a legal proceeding or governmental investigation. In addition, nothing in this Agreement shall prohibit you from reporting a suspected violation of law to the appropriate governmental agency or authority.
8. OPERATION OF YOUR SHOP.
A. SYSTEM STANDARDS.
You agree at all times to operate and maintain your Shop according to each and every System Standard, as we periodically modify and supplement them.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, the non-competition clauses apply to current and former spouses of the franchisee. Specifically, during the term of the agreement, the franchisee and their owners 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 Jeni's Ice Creams Scoop Shops to a Competitive Business. A Competitive Business is defined as any business (excluding any Jeni's Ice Creams Scoop Shop operated under a franchise agreement with Cream) that generates more than 10% of its total gross revenue from ice cream, ice cream-based desserts or drinks, and/or other frozen desserts or drinks.
Following the termination or expiration of the franchise agreement, the franchisee and their owners must also ensure that their current and former spouses, immediate family members, and other related parties do not engage in competitive activities for two years. This post-term non-compete 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 with these obligations, the two-year restricted period will commence on the date they begin to comply, potentially starting from the date a court order is issued to enforce the provision.
Cream's franchise agreement also includes non-interference and non-disparagement clauses that extend to current and former spouses, immediate family members, and other related parties, both during and after the term of the agreement. These clauses prevent them from soliciting or interfering with Cream's relationships with customers, franchisees, lenders, vendors, or consultants, and from speaking negatively about Cream, its affiliates, or the Jeni's brand. This comprehensive approach ensures that a broad range of individuals connected to the franchisee are bound by these restrictive covenants, aiming to protect Cream's business interests and goodwill.