Under what circumstances does Cream have an option to purchase the franchisee's business?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
, and related agreements. You should read these provisions in the agreements attached to this Disclosure Document.**
| Provision | Agreement | Summary |
|---|---|---|
| of first refusal, or there is a material change in terms, we will have an additional right of first refusal. | ||
| (o) Franchisor’s | Franchise Agreement | We may purchase any or all of the assets of your Shop (including |
| option to | – Section 15.D | the Premises, if it is owned by you or one of your owners or |
| purchase | affiliates) upon the termination or expiration of the Franchise | |
| franchisee’s | Agreement. The purchase price will be based upon the net | |
| business | realizable value of the tangible assets in accordance with the liquidation basis of accounting. We may exercise this right by giving you written notice of our election within 30 days after the termination or expiration. If challenged, the purchase price will be determined by an appraiser designated by us, with costs and fees shared equally by both parties. |
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, Cream has the option to purchase the assets of a franchisee's shop under specific circumstances related to the termination or expiration of the Franchise Agreement. This includes the physical premises if the franchisee or their affiliates own it. Cream must provide written notice of their intent to purchase within 30 days after the termination or expiration of the agreement.
The purchase price for the shop's assets will be determined based on the net realizable value of the tangible assets, using the liquidation basis of accounting. If the franchisee challenges the purchase price, an appraiser designated by Cream will determine the final price, with both parties equally sharing the costs and fees associated with the appraisal.
While Cream is deciding whether to purchase the shop, they have the right to operate it on an interim basis, as outlined in the Franchise Agreement. This provision ensures that Cream can maintain business operations during the transition period. This arrangement is fairly typical in franchising, as it protects the brand's continuity and customer relationships when a franchise location closes or changes ownership.