Are there any exceptions to the transfer conditions outlined in Section 4.C when transferring my Cream Agreement to a wholly-owned entity?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
ment Rights that you give the transferee, correct any information that we believe is inaccurate, and give the transferee copies of any reports that you have given us or we have made regarding your Development Rights.
Our consent to a transfer pursuant to this Section is not a representation of the fairness of the terms of any contract between you and the transferee, a guarantee of your or such transferee's prospects of success, or a waiver of any claims we have against you (or your owners) or of our right to demand the transferee's full compliance with this Agreement.
D. TRANSFER TO A WHOLLY-OWNED ENTITY.
If you do not originally sign this Agreement as an Entity, you may transfer this Agreement to an Entity; provided, that: (1) such Entity conducts no business other than the fulfillment of your Development Rights and the operation of Jeni's Ice Creams Scoop Shops; (2) you maintain management control of such Entity; (3) you own and control 100% of the economic interests, equity, and voting power of all issued and outstanding ownership interests in such Entity; (4) you satisfy all
conditions applicable to a transfer described in Section 4.C, except that we will not require payment of a transfer fee as described in Section 4.C(7) (provided, that you reimburse us for any direct costs we incur in connection with documenting and otherwise processing such transfer, including reasonable legal fees) and our right of first refusal under Section 4.E will not apply; and (5) that Entity must expressly assume all of your obligations under this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, if you did not initially sign the agreement as an entity, you are permitted to transfer the agreement to a wholly-owned entity under specific conditions. One key exception to the standard transfer conditions outlined in Section 4.C is that Cream will not require payment of a transfer fee, typically $25,000, as detailed in Section 4.C(7). However, you are still responsible for reimbursing Cream for any direct costs they incur while documenting and processing the transfer, including reasonable legal fees. Additionally, Cream's right of first refusal under Section 4.E will not apply to this type of transfer.
To qualify for this exception, the entity must meet several requirements. It can only conduct business related to fulfilling your Development Rights and operating Jeni's Ice Creams Scoop Shops. You must maintain management control of the entity and own 100% of its economic interests, equity, and voting power. The entity must also expressly assume all obligations under the agreement.
Even with the transfer, you will remain personally liable under the agreement, which includes signing Cream's current form of personal guaranty. You must also sign a consent to assignment and assignment form that is satisfactory to Cream, which may include a release of claims against Cream and its affiliates. This ensures that Cream maintains its rights and protections even after the transfer to your wholly-owned entity.