What is the radius, in miles, of the non-compete zone around a terminated Cream franchise?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
For two years beginning on the date of termination or expiration of this Agreement, you and your owners agree not to (and to use each of your best efforts to cause each of your respective current and former spouses, immediate family members, owners, officers, directors, employees, representatives, affiliates, successors, and assigns not to): (1) have any direct or indirect interest as an
owner (whether of record, beneficially, or otherwise) in a Competitive Business; (2) lease or sublease the Premises to a Competitive Business; and/or (3) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, in each case, if such Competitive Business is located or operating:
- (i) at the Premises or within a 5-mile radius of the Premises, or
- (ii) within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop.
If any person restricted by this Section 15.C fails to comply with these obligations as of the date of termination or expiration, the two-year restricted period for that person will commence on the date the person begins to comply with this Section 15.C, which may be the date a court order is entered enforcing this provision. You and your owners expressly acknowledge that you possess skills and abilities of a general nature and have other opportunities for exploiting these skills. Consequently, our enforcing the covenants made in this Section 15.C will not deprive you of your personal goodwill or ability to earn a living. The restrictions in this Section 15.C will also apply after any transfer, to the transferor and its owners, for a period of two years beginning on the effective date of the transfer, with the force and effect as though this Agreement had been terminated for such parties as of such date.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 44–51)
What This Means (2025 FDD)
According to the 2025 FDD, Cream franchise agreements include a covenant not to compete that takes effect upon termination or expiration of the franchise agreement. For two years after the agreement ends, the franchisee and their owners are restricted from having an interest in or working for a competitive business. This restriction applies if the competitive business is located either at the former Cream premises or within a 5-mile radius of the premises. It also applies within a 5-mile radius of any other Cream Scoop Shop.
This non-compete agreement extends not only to the franchisee but also to their spouses, immediate family members, owners, officers, directors, employees, representatives, affiliates, successors, and assigns. The FDD states that if anyone bound by this non-compete violates it, the two-year restriction period will only begin when they cease the violating activity. This could be the date a court order is issued to enforce the provision.
Cream emphasizes that franchisees possess general skills and opportunities, and enforcing the non-compete will not deprive them of their ability to earn a living. The non-compete also applies to the transferor and its owners for two years following any transfer of the franchise, as if the agreement had been terminated on the date of transfer. This ensures that the restrictions remain in place even if the franchise changes hands.