What post-termination obligations must the transferor agree to when transferring a Cream franchise?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
ransfer, and all other information we request about the proposed transfer, and such transfer meets all of our requirements, including terms, closing date, purchase price, amount of debt and payment terms, and we have determined that the purchase price and other terms of the transfer will not adversely affect the operation of your Shop;
- (4) you (and your owners) and the transferee (and its owners) sign all of the documents we are then requiring in connection with a transfer, in a form satisfactory to us, including: (i) a release of any and all claims (except for claims which cannot be released or waived pursuant to applicable law) against us and our affiliates and our and their owners, officers, directors, employees, and agents, and (ii) covenants that you and your transferring owners agree to satisfy all post-termination obligations under this Agreement;
- (5) all persons required to complete training under the transferee's franchise agreement satisfactorily complete our training program, and transferee has paid all costs and expenses we incur to provide the training program to such persons;
- (6) if the proposed transfer requires notice to or approval from the landlord of the Premises, or any other action under the terms of the Lease, you have taken such appropriate action and delivered us evidence of the same;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, when transferring a franchise, the transferor and their owners must sign documents that include covenants to satisfy all post-termination obligations under the Franchise Agreement. These obligations continue even after the agreement expires or terminates. They remain in effect until fully satisfied or naturally expire.
These continuing obligations include non-disparagement, meaning the transferor cannot make negative statements about the Cream brand. They also include non-competition, which restricts the transferor from engaging in a competitive business. Non-interference prevents the transferor from disrupting Cream's operations or relationships. Confidentiality requires maintaining the secrecy of Cream's proprietary information.
Additionally, the transferor must adhere to information security protocols, protect Cream's innovations, and provide indemnification, which means compensating Cream for any losses or damages resulting from the transferor's actions or breaches of the agreement. The non-compete obligations extend for two years after the transfer date and apply as if the agreement had been terminated for the transferor on that date. This ensures that the transferor does not immediately start a competing business that could harm the Cream franchise system.