Does Cream provide compensation to the franchisee if it exercises rights not expressly granted to the franchisee?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
For the avoidance of doubt, we reserve for ourselves and our affiliates all rights not expressly granted to you in this Agreement and the right to do all things that we do not expressly agree in this Agreement not to do, in each case, without compensation to you, without regard to proximity to your Development Area, and on such terms and conditions as we deem appropriate. For example, and without limitation, we and our affiliates may, ourselves or through authorized third parties:
- (1) establish and operate, and allow others to establish and operate, other Jeni's Ice Creams Scoop Shops using the System, at any location outside the Development Area, on such terms and conditions we deem appropriate;
- (2) establish and operate, and allow others to establish and operate, any other type of business, including any business that may offer products and services which are identical to, similar to, or competitive with products and services offered by Jeni's Ice Creams Scoop Shops, under trade names, trademarks, service marks, and commercial symbols other than the "Jeni's® " name and marks, anywhere in the world, including in the Development Area;
- (3) establish, and allow others to establish, businesses and distribution channels other than a Jeni's Ice Creams Scoop Shop (including, selling products at retail, wholesale, or through any online presence), wherever located or operating, including in your Development Area, regardless of the nature or location of the customers with whom such other businesses and distribution channels do business, regardless of the nature or location of the customers with whom such other businesses and distribution channels do business, including businesses that
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 FDD, Cream reserves the right to take actions not explicitly granted to the franchisee without providing any compensation. Specifically, Cream retains all rights not expressly given to the franchisee in the franchise agreement. This means Cream can act without regard to the franchisee's development area and on terms it deems appropriate, without compensating the franchisee.
Cream and its affiliates have the right to establish and operate Jeni's Ice Creams Scoop Shops outside the franchisee's development area. They can also establish other types of businesses, even those that compete with Jeni's Ice Creams Scoop Shops, within or outside the development area, offering similar products and services under different brand names. These activities can occur through various distribution channels, including retail, wholesale, and online sales, without any obligation to compensate the franchisee.
This reservation of rights allows Cream to pursue various business opportunities without being restricted by the franchisee's exclusive development area. For a prospective franchisee, this means that Cream could potentially open competing businesses or distribution channels near their location, which could impact their revenue and market share. The franchisee should be aware that the franchise agreement does not protect them from such competition from Cream itself or its affiliates.
Therefore, a potential franchisee should carefully consider the implications of these reserved rights and how they might affect their business. It would be prudent to discuss these potential competitive scenarios with Cream during the due diligence process to fully understand the scope of these rights and their potential impact on the franchisee's investment.