How does a transfer of the Cream franchise affect the non-compete obligations of the transferor?

According to Cream's 2025 Franchise Disclosure Document, a transfer of the franchise triggers a new non-compete obligation for the transferor and their owners. Specifically, the restrictions in the non-compete section apply to the transferor and their owners for two years, beginning on the effective date of the transfer. This non-compete has the same force and effect as if the Franchise Agreement had been terminated for those parties on that date.

This means that upon transferring their Cream franchise, the seller is subject to the same non-compete restrictions as if they had terminated their agreement. They are restricted from having any direct or indirect interest in a Competitive Business, or performing services for one, within the Development Area or within a 5-mile radius of any Jeni's Ice Creams Scoop Shop. This restriction lasts for two years from the transfer date.

This provision protects Cream by preventing a former franchisee from immediately opening a competing business nearby or working for a competitor after selling their franchise. Prospective franchisees should carefully consider these non-compete obligations before deciding to sell their franchise, as it could significantly limit their business opportunities for two years following the sale.