Does Cream require a release of claims as part of the transfer documents?
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;
- (6) if the proposed transfer requires notice to or approval from the landlord of the Premises, or any other action under the terms of the Lease, you have taken such appropriate action and delivered us evidence of the same;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 FDD, Cream requires a release of claims as part of the transfer process under certain conditions. Specifically, if a franchisee is transferring their franchise to a wholly-owned entity or transferring the franchise to a third party, Cream mandates that the franchisee (and their owners) sign documents that include a release of claims against Cream and its affiliates. This release covers any and all claims, except those that cannot be released or waived under applicable law.
This requirement means that a franchisee selling their Cream franchise must relinquish their right to sue Cream for any past grievances, with the exception of those protected by law. This is a fairly standard practice in franchising, as it provides the franchisor with legal protection and helps ensure a clean break between the outgoing franchisee and the brand. The FDD specifies that this release must be satisfactory to Cream, giving them discretion over the scope and terms of the release.
However, the FDD also notes some state-specific exceptions to this requirement. For example, in Maryland and Minnesota, any release required as a condition of transfer will not apply to claims or liabilities arising under those states' franchise laws. This means that even if a franchisee signs a release, they may still be able to pursue claims against Cream under Maryland or Minnesota franchise law. Prospective franchisees should carefully review these state-specific provisions and consult with an attorney to understand their rights and obligations when transferring a Cream franchise.