Does Cream have an obligation to operate my Shop on an interim basis if I abandon it?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
We have the right, but not the obligation, to enter the Premises and operate your Shop on an interim basis, or to appoint a third party to operate your Shop on an interim basis: (1) if you abandon or fail actively to operate your Shop for a period of more than 3 consecutive days; (2) at any time after the death or disability of you (if you are conducting business as an individual) or your Principal Owner (if you are conducting business as an Entity), if your Shop is at any time not being managed as required by Section 12.D; or (3) if this Agreement expires or is terminated and we are transitioning your Shop operations as permitted under Section 15D or determining whether to do so.
If we elect to operate your Shop on any interim basis, you must cooperate with us and our designees, continue to support the operations of your Shop, and comply with all of our instructions and System Standards, including making available any and all books, records, and accounts. You understand and acknowledge that during any such interim period, you are still the owner of your Shop, and you continue to bear sole liability for any and all accounts payable, obligations, and/or contracts, including all obligations under the Lease and all obligations to your suppliers, employees, and contractors, and any and all sales tax, income tax, and other taxes and charges arising from the Net Sales of your Shop, in each case unless and until we expressly assume them in connection with the purchase of your Shop under Section 15.D. If we or our designee operate your Shop on an interim basis, you acknowledge that we or our designee will have a duty to utilize only reasonable efforts and will not be liable to you or your owners for any debts, losses, or obligations your Shop incurs, or to
any of your creditors for any supplies, products, or other assets or services your Shop purchases, while we or our designee manage it. You understand that we are not required to use your employees, suppliers, or contractors to operate your Shop. You also agree that we may elect to cease such interim operations of your Shop at any time with notice to you.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, Cream has the right, but not the obligation, to operate a franchise location on an interim basis if the franchisee abandons the shop. This means that if a Cream franchisee abandons their shop or fails to actively operate it for more than 3 consecutive days, Cream has the option to step in and run the location temporarily, but they are not required to do so. Cream can also appoint a third party to manage the shop on an interim basis.
This provision protects Cream's brand and ensures continued operation, but it also places specific responsibilities on the franchisee. Even during interim operation by Cream, the franchisee remains the owner of the shop and is liable for all accounts payable, obligations, and contracts, including lease obligations, supplier payments, employee wages, and taxes, unless Cream explicitly assumes these responsibilities upon purchasing the shop. Cream is only required to utilize reasonable efforts in managing the shop and is not liable for any debts, losses, or obligations incurred during the interim period.
Cream also has the right to collect the Net Sales of the shop during the interim period and deduct all operating expenses, including royalties, brand fund contributions, and their own costs and expenses. Any remaining Net Sales become Cream's property as consideration for their management. If the expenses exceed the Net Sales, the franchisee is responsible for covering the balance. Cream can terminate the franchise agreement, even during the interim operation, and the franchisee's indemnification obligations continue to apply. This arrangement ensures that Cream can maintain the operation of the shop while minimizing their own financial risk and ensuring the franchisee remains ultimately responsible for the business's financial obligations.