Can Cream reduce or suspend Brand Fund Contributions for a period of time?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
Neither we nor any of our affiliates has any fiduciary obligation to you or any other person for administering the Brand Fund. We will not make the financial statements of the Brand Fund available for review by franchisees. We may reduce or suspend Brand Fund Contributions and/or operations of the Brand Fund for one or more periods of any length and terminate (and, if terminated, reinstate) the Brand Fund and associated Brand Fund Contributions. If we terminate the Brand Fund, we will spend the remaining balance of the monies in the Brand Fund in accordance with our System Standards until such amounts are exhausted. We may elect to maintain multiple Brand Funds, whether determined by geographic region, country, or otherwise, or consolidate or merge multiple Brand Funds.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 28–35)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, Cream has the authority to reduce or suspend Brand Fund contributions for any duration. Cream also has the right to terminate and reinstate the Brand Fund and its associated contributions. If Cream terminates the Brand Fund, the remaining balance will be spent according to their System Standards until the funds are exhausted. Cream can also elect to maintain multiple Brand Funds based on geographic region, country, or consolidate/merge multiple Brand Funds.
This flexibility in managing the Brand Fund provides Cream with the ability to adjust advertising and marketing strategies based on current market conditions or the overall financial health of the franchise system. For a prospective franchisee, this means that the required contribution to the Brand Fund, which is currently 2% of Net Sales and can be modified up to 4% of Net Sales with 30 days prior notice, could potentially be reduced or suspended, offering some financial relief during challenging periods. However, it also means that Cream has the discretion to change the contribution amount, up to the maximum of 4%, which could increase operating costs.
It's important to note that Cream has no fiduciary obligation to franchisees in administering the Brand Fund, and they will not make the Brand Fund's financial statements available for franchisee review. This lack of transparency might be a concern for some franchisees, as they will not have direct insight into how the Brand Fund is being managed or how their contributions are being spent. Despite this, Jeni's Ice Creams Scoop Shops owned by Cream or its affiliates will contribute to the Brand Fund at the same rate as franchise-owned locations, aligning their interests with those of the franchisees.
Prospective franchisees should consider the implications of Cream's control over the Brand Fund and the potential for changes in contribution amounts. While the possibility of reduced or suspended contributions could be beneficial, the lack of financial transparency and the potential for increased contributions should be carefully evaluated. It would be prudent for potential franchisees to discuss the Brand Fund's management and potential scenarios with existing franchisees to gain a better understanding of how it operates in practice.