What section of the Cream Franchise Agreement discusses non-competition covenants during the term of the franchise?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPTS]
7. RESTRICTIVE COVENANTS.
A. 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.
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, Item 23, titled "RECEIPTS", outlines the restrictive covenants that franchisees must adhere to. Specifically, section A, labeled "NON-COMPETITION DURING TERM," details the restrictions placed on the franchisee and their related parties during the term of the franchise agreement.
During the franchise term, Cream requires franchisees and their owners to deal exclusively with them. Franchisees and their owners, including family members, are prohibited from having any direct or indirect interest in a Competitive Business. A Competitive Business is defined as any business (excluding other Jeni's Ice Creams Scoop Shops) where ice cream or similar products constitute more than 10% of the total gross revenue. The only exception to this is owning less than 5% of a publicly traded Competitive Business.
Additionally, franchisees cannot perform services for a Competitive Business as a director, officer, manager, employee, consultant, representative, or agent. They are also prohibited from diverting or attempting to divert any business or customers of any Jeni's Ice Creams Scoop Shop to a Competitive Business. These restrictions are designed to protect Cream's market position and prevent franchisees from using the franchisor's resources and knowledge to benefit a competing business during the term of the agreement.