What is the restriction on ownership interest in a Competitive Business for a transferee or its owners when transferring a Cream franchise?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
ty shall on your behalf use, any written materials to advertise or promote the transfer of your Shop or of any ownership interest in you without our prior written approval.
C. CONDITIONS FOR APPROVAL OF TRANSFER.
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:
- (1) you submit an application in writing requesting our consent and providing us all information or documents we request about the transferee and its owners that we request to evaluate their ability to satisfy their respective obligations under our then-current form of franchise agreement and any documents ancillary thereto, and each such person must have completed and satisfied all of our application and certification requirements, including the criteria that neither the transferee nor its owners (if the transferee is an Entity) or affiliates have an ownership interest in or perform services for a Competitive Business;
- (2) you and your owners have not violated any provision of this Agreement or any other agreement with us or our affiliates during both the 60-day period before you requested our consent to the transfer and the period between your request and the effective date of the transfer, including that you have paid all Royalties, Brand Fund Contributions, and other amounts owed to us, our affiliates, and third-party suppliers, and have submitted all required reports and statements;
- (3) you provide us executed versions of any documents executed by you (or your owners) and transferee (and its owners) to effect the transfer, 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;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, when transferring a franchise, the transferee or its owners cannot have an ownership interest in or perform services for a Competitive Business. Specifically, Cream will approve a transfer if the transferee and its owners meet all application and certification requirements, including the criteria that neither the transferee nor its owners (if the transferee is an Entity) or affiliates have an ownership interest in or perform services for a Competitive Business.
A "Competitive Business" is defined as any business (excluding any Jeni's Ice Creams Scoop Shop operated under a franchise agreement with Cream) that operates or grants franchises or licenses to others to operate a business where ice cream, ice cream-based desserts or drinks, and/or other frozen desserts or drinks, or similar products represents more than 10% of the total gross revenue.
This restriction ensures that the transferee is fully committed to the Cream franchise and does not have conflicting interests that could harm the Cream brand. A prospective franchisee should carefully evaluate their existing business interests and those of their owners to ensure compliance with this requirement before seeking to acquire a Cream franchise. This restriction applies not only to direct ownership but also to performing services for a competing business, indicating Cream's intent to prevent any form of divided loyalty or knowledge sharing with competitors.