What section of the Cream FDD outlines the option to purchase the shop?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPTS]
D. OUR RIGHT TO PURCHASE YOUR SHOP.
We have the option to purchase any or all of the assets of your Shop, including your Premises (if you or one of your owners or affiliates owns the Premises) upon termination or expiration of this Agreement. We have the unrestricted right to assign this option to purchase. We may exercise this option by giving you written notice within 30 days after the date of such termination or expiration. The purchase price for your Shop will be the net realizable value of the tangible assets in accordance with the liquidation basis of accounting (not the value of your Shop as a going concern). If you dispute our calculation of the purchase price, the purchase price will be determined by one independent accredited appraiser designated by us who will calculate the purchase price applying the criteria specified above. We agree to select the appraiser within 15 days after we receive the financial and other information necessary to calculate the purchase price (if you, and we have not agreed on the purchase price before then). You and we will share equally the appraiser's fees and expenses. The appraiser must complete its calculation within 30 days after its appointment. We may set off against the purchase price, and reduce the purchase price by, any and all amounts you or your owners owe us or our affiliates.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, Item 23, Section D, titled "OUR RIGHT TO PURCHASE YOUR SHOP," details Cream's option to purchase a franchisee's shop. This section explains the circumstances under which Cream may exercise this option, specifically upon the termination or expiration of the Franchise Agreement. Cream has the right to assign this purchase option to another party.
Cream must provide written notice within 30 days after the termination or expiration date to exercise its option to purchase the shop. The purchase price will be based on the net realizable value of the tangible assets, calculated according to the liquidation basis of accounting, rather than the shop's value as a going concern. This valuation method typically results in a lower purchase price, as it focuses on the resale value of individual assets rather than the business's overall profitability and goodwill.
If the franchisee disputes Cream's calculation of the purchase price, an independent accredited appraiser designated by Cream will determine the price, applying the criteria mentioned above. Both Cream and the franchisee will equally share the appraiser's fees and expenses. The appraiser is required to complete the calculation within 30 days of their appointment. Cream can also deduct any amounts owed by the franchisee or their owners to Cream or its affiliates from the purchase price. This could include unpaid franchise fees, royalties, or other debts. This provision ensures Cream can recover outstanding debts during the purchase process.