What post-termination obligations must the transferring owners agree to satisfy when transferring a Cream franchise?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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;
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 transferring owners must agree to satisfy all post-termination obligations under the Franchise Agreement. This requirement is part of the conditions Cream sets for approving a transfer. Specifically, both the transferring owners and the new transferee must sign documents that include a covenant ensuring the transferring owners will fulfill these post-termination duties.
These post-termination obligations, as outlined in the FDD, include covenants not to compete. For a period of two years after the termination or expiration of the franchise agreement, the transferring owners (and their spouses, family members, owners, officers, etc.) must not have any direct or indirect interest in a Competitive Business within the Development Area or within a 5-mile radius of any Cream Scoop Shop. This restriction applies equally to performing services for a Competitive Business in those areas.
Furthermore, all obligations that expressly or by their nature survive the expiration or termination of the Franchise Agreement remain in full effect. These include obligations related to non-disparagement, non-competition, non-interference, confidentiality, information security, Innovations, and indemnification. This means that even after transferring the franchise, the original owners continue to be bound by these responsibilities, ensuring the protection of Cream's brand and business interests.
In practical terms, this means that transferring owners cannot simply sell their franchise and then immediately open a competing ice cream shop nearby. They must abide by the non-compete and confidentiality clauses, among other continuing obligations, for the specified period. This protects Cream from losing business or having its trade secrets compromised by former franchisees.