Does Cream require a release of claims as part of the transfer process?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPTS]
You may not transfer this Agreement before your Shop has opened for business. Thereafter, we will approve a transfer if all of the following requirements are met:
- (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;
D. TRANSFER TO A WHOLLY-OWNED ENTITY.
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.
MARYLAND
-
- Under COMAR 02.02.08.16L, any release required as a condition of renewal, sale and/or assignment/transfer will not apply to claims or liability arising under the Maryland Franchise Registration and Disclosure Law.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, a release of claims is generally required as part of the transfer process, with some exceptions based on applicable law. Specifically, when a franchisee seeks Cream's approval for a transfer, both the franchisee (and their owners) and the transferee (and their owners) must sign all documents required by Cream, including 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. Additionally, transferring owners must agree to satisfy all post-termination obligations under the Franchise Agreement.
This requirement means that a franchisee selling their Cream business must relinquish any existing or potential legal claims against Cream to complete the transfer. Similarly, the incoming franchisee must also release any claims. This is a significant point for both parties, as it could limit their legal recourse against Cream in the future. The FDD specifies that these releases are in a form satisfactory to Cream, giving Cream discretion over the scope and terms of the release.
However, the FDD also notes that certain states, such as Maryland, have laws that may prevent the release from applying to claims arising under the state's franchise laws. This means that even if a franchisee signs a release, they may still be able to pursue claims related to franchise law violations in those specific states. Prospective franchisees should consult with legal counsel to understand the implications of these release requirements and how they may be affected by state-specific franchise laws.
Furthermore, if a franchisee is transferring the agreement to a wholly-owned entity, they must sign a consent to assignment and assignment form that may include a release of any and all claims (except for claims which cannot be released or waived pursuant to an applicable franchise statute) against Cream and its affiliates. This condition reinforces Cream's emphasis on securing comprehensive releases during transfer scenarios, with the caveat that legal limitations may apply depending on the jurisdiction.