What is the term length of the new franchise agreement signed by the transferee of a Cream franchise?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
- (8) the transferee must (if the transfer is of this Agreement or your Shop), sign our then-current form of franchise agreement and related documents, any and all of the provisions of which may differ materially from any and all of those contained in this Agreement, including the Royalty and the Brand Fund Contribution; provided, that the term of the new franchise agreement signed will equal the then-remaining Term;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, if a Cream franchise is transferred to a new owner, the term of the new franchise agreement will be equal to the then-remaining term of the original franchise agreement. This means the new franchisee will operate under the franchise agreement for the time left on the original agreement, not a completely new term.
For a prospective Cream franchisee, this is an important consideration when buying an existing franchise. The remaining term will influence the value of the franchise and the time available to recoup the investment and generate profit before needing to renew the agreement. If the original agreement is nearing its end, the new franchisee may soon face the costs and requirements associated with renewal, including potential remodeling and updated franchise fees.
This policy is fairly standard in the franchise industry, as it allows the franchisor to maintain consistent terms across its franchise network while ensuring a smooth transition of ownership. However, it is crucial for the transferee to fully understand the implications of the remaining term and to factor this into their decision-making process and financial projections. They should also be aware that the renewal terms may differ from the original agreement, as stated in the FDD.