Does state law affect the non-competition covenants for Cream franchisees?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 41 of the Illinois Franchise Disclosure Act provides that any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
Your rights upon termination and non-renewal of a franchise agreement are subject to sections 19 and 20 of the Illinois Franchise Disclosure Act.
MARYLAND
The following provisions are annexed to and form part of this Agreement if and only if, and in such case to the extent that: (a) you are a resident of the State of Maryland; or (b) your franchised business is or will be operated in the State of Maryland; or (c) the offer of the franchise was made or accepted in the State of Maryland.
- The following is added to the end of Sections 12.C(4), 12.E, 13.A(8), and 15.D of the Agreement:
Pursuant to COMAR 02.02.08.16L, any release required as a condition of renewal and/or assignment/transfer will not apply to claims arising under the Maryland Franchise Registration and Disclosure Law.
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, franchise agreements in certain states, specifically Illinois and Maryland, are subject to specific state laws that may affect the enforcement and interpretation of non-competition covenants.
In Illinois, the Illinois Franchise Disclosure Act states that any provision that requires a franchisee to waive compliance with the Illinois Franchise Disclosure Act or any other Illinois law is void. This means Cream franchisees in Illinois cannot waive their rights under Illinois franchise law, which could impact the enforceability of certain non-compete provisions. Additionally, the franchisee's rights upon termination and non-renewal are protected by sections 19 and 20 of the Illinois Franchise Disclosure Act.
For Cream franchisees in Maryland, any release required as a condition of renewal or assignment will not apply to claims arising under the Maryland Franchise Registration and Disclosure Law. This ensures that franchisees in Maryland retain their rights to make claims under Maryland franchise law, even when signing releases for renewal or transfer of the franchise. These state-specific provisions are added to the franchise agreement to comply with local regulations and protect the franchisee's rights within those states.