What representations and warranties are Cream franchisees required to make if Cream exercises its right of first refusal?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
If you do not originally sign this Agreement as an Entity, you may transfer this Agreement to an Entity; provided, that: (1) such Entity conducts no business other than the fulfillment of your Development Rights and the operation of Jeni's Ice Creams Scoop Shops; (2) you maintain management control of such Entity; (3) you own and control 100% of the economic interests, equity, and voting power of all issued and outstanding ownership interests in such Entity; (4) you satisfy all
conditions applicable to a transfer described in Section 4.C, except that we will not require payment of a transfer fee as described in Section 4.C(7) (provided, that you reimburse us for any direct costs we incur in connection with documenting and otherwise processing such transfer, including reasonable legal fees) and our right of first refusal under Section 4.E will not apply; and (5) that Entity must expressly assume all of your obligations under this Agreement. You agree to remain personally liable under this Agreement as if the transfer to the Entity did not occur, including by signing our then-current form of personal guaranty of the obligations of such Entity. You must also sign the form of consent to assignment and assignment satisfactory to us which may include a release of any and all claims (except for claims which cannot be released or waived pursuant to an applicable franchise law statute) against us and our affiliates, and our and their owners, officers, directors, employees, and agents.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
Based on the 2025 FDD, if a Cream franchisee wishes to transfer their franchise to a new entity, and Cream exercises its right of first refusal, the franchisee must adhere to specific conditions. The franchisee must ensure the entity conducts no business other than fulfilling development rights and operating Cream Scoop Shops. The franchisee must maintain management control of the entity and own/control 100% of the economic interests, equity, and voting power.
Additionally, the franchisee must satisfy all conditions applicable to a standard transfer, except for the transfer fee. However, the franchisee is still responsible for reimbursing Cream for any direct costs incurred during the transfer, including reasonable legal fees. Cream's right of first refusal will not apply in this specific scenario. The entity must expressly assume all obligations under the existing agreement, and the franchisee must remain personally liable, including signing a personal guaranty.
Finally, the franchisee must sign a consent to assignment and assignment form that is satisfactory to Cream. This form may include a release of claims against Cream and its affiliates, owners, officers, directors, employees, and agents, except for claims that cannot be released or waived under applicable franchise law. This ensures Cream is protected from potential future liabilities related to the transfer.