What releases and covenants must be signed by the transferor and transferee to transfer 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;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, both the transferor (the current franchisee) and the transferee (the new franchisee) must sign specific documents to complete the transfer of a franchise. These documents include a release of claims and covenants related to post-termination obligations. Specifically, both parties must sign all documents that Cream requires at the time of the transfer, in a form satisfactory to Cream.
The release of claims involves both the transferor and transferee giving up any existing or future claims against Cream and its affiliates, with exceptions for claims that cannot be waived under applicable laws. This means that neither party can sue Cream for any reason related to the franchise agreement, except where prohibited by law. The covenant regarding post-termination obligations requires the transferor and their owners to fulfill all responsibilities outlined in the franchise agreement even after the transfer is complete. This ensures that any pending obligations, such as financial or operational requirements, are satisfied.
For transfers involving a beneficial or ownership interest, the transferee must sign Cream's current form of guaranty, which binds them personally to all provisions of the franchise agreement and any related ancillary agreements. Additionally, an updated Attachment D must be provided. If the transfer is to a wholly-owned entity, the transferor must sign a consent to assignment and assignment form, including a release of claims against Cream. These requirements ensure that Cream maintains control over who operates its franchises and that all parties are legally bound to the franchise agreement's terms.
Prospective franchisees should carefully review these requirements with legal counsel to fully understand their obligations and potential liabilities when transferring a Cream franchise. Understanding these conditions is crucial for a smooth and legally sound transfer process.