What representations and warranties must the seller provide to Cream when Cream exercises its right of first refusal?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
We may elect to purchase the interest offered for the price and on the terms and conditions contained in the offer, provided that: (1) we notify you or your selling owner(s) that we intend to purchase the interest within 60 days after we receive a copy of the offer and all other information we request; (2) we may substitute cash for any form of payment proposed in the offer (such as ownership interests in a privately-held entity); (3) we or our designee will be offered the same terms for any promissory notes or other deferred payments as those offered by the proposed buyer; (4) we will have an additional 90 days to prepare for closing after notifying you of our election to purchase; and (5) we must receive, and you and your owners agree to make, all customary representations and warranties given by the seller of the assets of a business or the ownership interests in any legal business entity.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, if a franchisee or their owners wish to transfer their interest in the franchise, they must first obtain a bona fide written offer from a responsible buyer and provide Cream with a copy of the offer. This offer must include payment terms and financing details, with a proposed purchase price in a dollar amount and an earnest money deposit of at least 5% of the offering price.
When Cream exercises its right of first refusal, the franchisee and their owners must provide all customary representations and warranties given by the seller of a business's assets or ownership interests in a legal business entity. Cream has the option to substitute cash for any proposed form of payment and will be offered the same terms for promissory notes or deferred payments as the proposed buyer. Cream has 60 days to notify the seller of their intent to purchase the interest and an additional 90 days to prepare for closing.
This requirement ensures that Cream receives the same assurances about the business's condition and value as any other potential buyer. These representations and warranties typically cover aspects such as the accuracy of financial statements, the absence of undisclosed liabilities, and compliance with laws and regulations. This protects Cream from inheriting unforeseen problems or risks associated with the franchise being transferred.