factual

What section of the Cream FDD outlines the non-competition provisions?

Cream Franchise · 2025 FDD

Answer from 2025 FDD Document

[Item 23: RECEIPTS]

C. NON-COMPETITION DURING TERM.

We have granted you the rights in this Agreement in consideration of and reliance upon your agreement to deal exclusively with us. You therefore agree that, during the Term, 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, 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 (defined below), wherever located or operating (except that equity ownership of less than 5% of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this subparagraph);
  • (2) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating; or
  • (3) divert or attempt to divert any actual or potential business or customer of any Jeni's Ice Creams Scoop Shop to a Competitive Business.

The term "Competitive Business" means any business (excluding any Jeni's Ice Creams Scoop Shop operated under a franchise agreement with us) operating or granting franchises or licenses to others to operate any business for which 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.

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.

Source: Item 23 — RECEIPTS (FDD pages 61–192)

What This Means (2025 FDD)

According to the 2025 Cream FDD, Item 23, titled "RECEIPTS", details the non-competition provisions for franchisees. These provisions are separated into different sections addressing non-competition during the term of the agreement and after termination or expiration.

Specifically, Section C of Item 23 outlines the non-competition agreement that Cream franchisees must adhere to during the term of their franchise agreement. This section states that franchisees and their owners must not have any direct or indirect interest in a Competitive Business, nor perform services for one. A Competitive Business is defined as any business where ice cream or similar products represent more than 10% of the total gross revenue, excluding other Cream franchises. An exception exists for owning less than 5% of a publicly traded Competitive Business.

Section E of Item 23 outlines the non-competition agreement that Cream franchisees must adhere to after the termination or expiration of their franchise agreement. For two years after the agreement ends, franchisees and their owners cannot have an interest in or work for a Competitive Business within the Development Area or within a 5-mile radius of any Cream Scoop Shop. The agreement also specifies that the restricted period begins when the person complies with the obligations, potentially after a court order. The FDD also states that these restrictions apply to transferors of the franchise for two years after the transfer date.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.