factual

Is there a geographic limit to the non-competition covenant for Cream franchisees after termination?

Cream Franchise · 2025 FDD

Answer from 2025 FDD Document

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 Cream's 2025 Franchise Disclosure Document, the non-competition covenant after termination has geographic limitations. For a period of two years after the termination or expiration of the Franchise Agreement, the franchisee and their owners are restricted from having an interest in or working for a Competitive Business.

The geographic scope of this restriction 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 a former Cream franchisee could potentially operate or be involved with a competing business outside of these defined areas without violating the non-compete agreement.

It is important to note that if a person fails to comply with the non-compete obligations, the two-year restricted period will commence on the date the person begins to comply with the Section. The restrictions also apply to the transferor and its owners after any transfer for a period of two years beginning on the effective date of the transfer.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.