How is 'ownership interest' defined in the Cream franchise agreement?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
References in this Agreement to: (1) "we," "us," and "our," with respect to all of our rights and all of your obligations to us under this Agreement, include any of our affiliates with whom you deal; (2) "affiliate" of any person means any other person that is directly or indirectly owned or controlled by, under common control with, or owning or controlling such person; (3) "control" of any person means the ownership interest of greater than 50% of the outstanding ownership interests of any entity, and/or the power to direct or cause the direction of management and policies; (4) "ownership interest" means any direct or indirect title, ownership and/or beneficial interest in the equity, voting rights, or economic interest in any Entity; (5) "owner" means any person that holds any direct or indirect ownership interest in an Entity; (6) "person" means any natural person, Entity, unincorporated association, cooperative, or other legal or functional organization; (7) unless otherwise specified, "days" means calendar days and not business days; and (8) "your Shop" includes all of the assets of the Jeni's Ice Creams Scoop Shop you operate under this Agreement, including its revenue and the Lease. The use of the term "including" in this Agreement, means in each case "including, without limitation." If two or more persons are at any time the owners of your Shop, whether as partners or joint venturers, their obligations, and liabilities to us will be joint and several.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, 'ownership interest' is defined as any direct or indirect title, ownership, and/or beneficial interest in the equity, voting rights, or economic interest in any Entity. This definition is important for prospective franchisees to understand, as it clarifies the scope of restrictions and obligations related to ownership in the Cream franchise system.
This definition is used in several contexts within the franchise agreement. For example, it is relevant when determining who qualifies as an 'owner' who may be subject to certain obligations or restrictions, such as non-compete agreements. It also clarifies what constitutes 'control' of an entity, which is defined as ownership interest of greater than 50% of the outstanding ownership interests of any entity, and/or the power to direct or cause the direction of management and policies.
The broad scope of this definition means that franchisees need to be aware of not only direct ownership but also any indirect or beneficial interests they or related parties may have. This could impact their ability to participate in other businesses or investments during the term of the franchise agreement. Franchisees should carefully review these definitions and restrictions with legal counsel to ensure they fully understand their obligations and potential limitations.