Is there a geographic limit to the non-compete clause after termination of a Cream franchise?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
E. 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; and/or (2) 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:
- (a) within the Development Area, or
- (b) within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop.
If any person restricted by this Section 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, 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 will not deprive you of your personal goodwill or ability to earn a living. The restrictions in this Section 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.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 44–51)
What This Means (2025 FDD)
According to the 2025 FDD, the Cream franchise agreement includes a post-term covenant not to compete that extends for two years after the termination or expiration of the agreement. This covenant 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 geographic scope of this non-compete is limited to (a) the Development Area and (b) within a 5-mile radius of any other Jeni's Ice Creams Scoop Shop. This means that after leaving the Cream system, a former franchisee is restricted from engaging in a competitive ice cream business within their former development area or near any other Cream location.
The FDD specifies that the restricted period begins when the person complies with the obligations, potentially starting from the date a court order enforces the provision. These restrictions also apply to transferors after a transfer, as if the agreement was terminated on the transfer date. Cream emphasizes that these restrictions will not deprive franchisees of their ability to earn a living, as they possess general skills and abilities.