Is the transfer fee described in Section 12.C(10) required when transferring my Cream Franchise Agreement to a wholly-owned entity?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
E. 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 your Shop and, if applicable, other 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) all of the assets of your Shop are owned, and the business of your Shop is conducted only by, that single Entity; (5) you satisfy all conditions applicable to a transfer described in Section 12.C, except that we will not require payment of a transfer fee as described in Section 12.C(10) (provided, that you reimburse us for any costs we incur in connection with documenting and otherwise processing such transfer, including reasonable legal fees) and our right of first refusal under Section 12.F will not apply; and (6) that Entity must expressly assume all of your obligations under this Agreement, your Lease, and otherwise satisfy the conditions under this Agreement, including delivery of insurance certificates to us. You agree to remain personally liable under this Agreement as if the transfer to the Entity did not occur, including by signing our then-current form of personal guaranty of the obligations of such Entity. You must also sign the form of consent to assignment and assignment satisfactory to us which may include a release of any and all claims (except for claims which cannot be released or waived pursuant to an applicable franchise statute) against us and our affiliates, and our and their owners, officers, directors, employees, and agents.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, under certain conditions, you may be exempt from paying a transfer fee when transferring your Franchise Agreement to a wholly-owned entity. Specifically, if you did not originally sign the agreement as an entity, you can transfer it to an entity without paying the transfer fee described in Section 12.C(10). However, you will be responsible for reimbursing Cream for any costs they incur while documenting and processing the transfer, including reasonable legal fees.
Several conditions must be met for this exception to apply. The entity must conduct no business other than operating your Cream shop and, if applicable, other Cream shops. You must maintain management control of the entity and own and control 100% of its economic interests, equity, and voting power. Additionally, all assets of your shop must be owned, and the business conducted solely by this single entity. The entity must also expressly assume all obligations under the Franchise Agreement and your Lease, and satisfy all conditions, including providing insurance certificates.
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 provision allows franchisees to structure their business for liability or tax purposes without incurring a standard transfer fee, provided they maintain full control and financial responsibility for the franchise.