What must owners with a 10% or greater ownership interest in a Cream franchise do?

According to Cream's 2025 Franchise Disclosure Document, if the franchisee is a legal business entity, each direct and indirect owner with a 10% or greater ownership interest must execute a guaranty. This guaranty legally binds them, jointly and severally, to all provisions of the Franchise Agreement and any related ancillary agreements between the franchisee and Cream. The current form of guaranty is included as Attachment D to the Franchise Agreement. If any owner is an individual, their spouse must provide written consent to the owner's execution of the guaranty.

This requirement ensures that individuals with significant ownership stakes are personally liable for the franchise's obligations. The joint and several liability means that each owner can be held responsible for the entire debt or obligation, regardless of their individual ownership percentage. This is a common practice in franchising to provide the franchisor with added security and commitment from the ownership group.

Furthermore, these owners also agree not to engage in any Competitive Business during the term of the agreement, with limited exceptions for minor, passive investments in publicly traded companies. They must also avoid interfering with Cream's relationships with customers, franchisees, or suppliers. These restrictions are designed to protect Cream's business interests and prevent conflicts of interest.

During the renewal or transfer of a Cream franchise, these owners must also meet certain conditions. For renewal, they must have substantially complied with the agreement and sign the franchise agreement, ancillary documents, and guaranties then in use. For a transfer, the owners must sign Cream's current form of guaranty, agreeing to be bound by the agreement's provisions, and provide an updated Attachment A to reflect any changes in ownership.