After termination or expiration of the Cream Franchise Agreement, for how long does the non-competition covenant apply?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
ning any Marks from your Shop. You must reimburse us for all costs and expenses we incur in correcting any such deficiencies. You hereby appoint us as your true and lawful attorney-in-fact to take such actions and execute such documents on your behalf as may be required to effect the foregoing purposes.
C. 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; (2) lease or sublease the Premises to a Competitive Business; and/or (3) 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:
- (i) at the Premises or within a 5-mile radius of the Premises, or
- (ii) within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop.
If any person restricted by this Section 15.C 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 15.C, 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 15.C will not deprive you of your personal goodwill or ability to earn a living. The restrictions in this Section 15.C 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.
D.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 44–51)
What This Means (2025 FDD)
According to the 2025 FDD, Cream's non-compete covenant lasts for two years after the termination or expiration of the Franchise Agreement. This restriction applies to the franchisee and their owners, preventing them from having a direct or indirect interest in a Competitive Business or performing services for one.
The non-compete restrictions apply if the Competitive Business is located within the Development Area or within a 5-mile radius of any Jeni's Ice Creams Scoop Shop. If someone fails to comply with these obligations, the two-year restricted period starts when they begin to comply, potentially after a court order enforces the provision.
The FDD states that the franchisee's skills are general and that enforcing the non-compete will not deprive them of their ability to earn a living. These restrictions also apply to transferors and their owners for two years from the transfer date, as if the agreement was terminated for them on that date. Cream also states that all obligations related to non-competition survive the agreement's expiration or termination.