What section of the Cream Area Development Agreement outlines the non-competition covenants after termination?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPTS]
E. COVENANT NOT TO COMPETE.
For two years beginning on the date of termination or expiration of this Agreement, you and your owners agree not to (and to use each of your best efforts to cause each of your respective current and former spouses, immediate family members, owners, officers, directors, employees, representatives, affiliates, successors and assigns not to): (1) have any direct or indirect interest as an owner (whether of record, beneficially, or otherwise) in a Competitive Business; and/or (2) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, in each case, if such Competitive Business is located or operating:
- (a) within the Development Area, or
- (b) within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop.
If any person restricted by this Section fails to comply with these obligations as of the date of termination or expiration, the two-year restricted period for that person will commence on the date the person begins to comply with this Section, which may be the date a court order is entered enforcing
this provision. You and your owners expressly acknowledge that you possess skills and abilities of a general nature and have other opportunities for exploiting these skills. Consequently, our enforcing the covenants made in this Section will not deprive you of your personal goodwill or ability to earn a living. The restrictions in this Section will also apply after any transfer, to the transferor and its owners, for a period of two years beginning on the effective date of the transfer, with the force and effect as though this Agreement had been terminated for such parties as of such date.
F. CONTINUING OBLIGATIONS.
All of our and your (and your owners') obligations which expressly or by their nature survive this Agreement's expiration or termination will continue in full force and effect subsequent to and notwithstanding its expiration or termination and until they are satisfied in full or by their nature expire, including all obligations relating to non-disparagement, non-competition, non-interference, confidentiality, information security, Innovations, and indemnification.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 44–51)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, Section E of Item 23 covers the non-competition agreement post-termination or expiration of the Area Development Agreement. This section stipulates that for two years following the termination or expiration, the franchisee and their owners must not have a direct or indirect interest in a Competitive Business, nor perform services for one. This restriction applies if the Competitive Business is located within the Development Area or within a 5-mile radius of any Jeni's Ice Creams Scoop Shop.
The non-compete extends not only to the franchisee but also to their spouses, immediate family members, owners, officers, directors, employees, representatives, affiliates, successors, and assigns. The agreement specifies that if any restricted person fails to comply, the two-year restriction period begins when they start complying with the terms, potentially starting from the date of a court order enforcing the provision.
Cream emphasizes that franchisees possess general skills and opportunities, and enforcing these covenants will not deprive them of their personal goodwill or ability to earn a living. These restrictions also apply to transferors and their owners for two years after any transfer, as if the agreement had been terminated for those parties on the transfer date. Furthermore, Section F outlines that all obligations that survive the agreement's expiration or termination, including those related to non-competition, remain in effect until fully satisfied or expired.