What section of the Cream Franchise Agreement discusses non-competition covenants after the franchise is terminated or expires?
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, titled "COVENANT NOT TO COMPETE" outlines the non-competition terms that apply after the franchise agreement is terminated or expires. This section specifies that for two years following the termination or expiration date, the franchisee and their owners must not have any direct or indirect interest in a Competitive Business, nor perform services for one.
The restrictions apply within the Development Area or within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop. The agreement clarifies that if someone fails to comply with these obligations, the two-year restricted period starts when they begin to comply, potentially after a court order. Cream emphasizes that these restrictions will not deprive the franchisee of their ability to earn a living, as they possess general skills and abilities.
Furthermore, section F of Item 23, titled "CONTINUING OBLIGATIONS," reinforces that obligations related to non-competition continue even after the agreement expires or terminates. This means that the franchisee's duty to not compete, along with other obligations like non-disparagement and confidentiality, remain in effect until fully satisfied or naturally expired.