Under what circumstances does Cream have a right of first refusal regarding the transfer of a Cream franchise?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
erests in any legal business entity.
We have the unrestricted right to assign any or all of our rights under this Section 12.F to a third party who then will have the rights described herein. If we do not exercise our right of first refusal, you or your owners may complete the sale to the proposed buyer on the original offer's terms, but only
if we otherwise approve the transfer in accordance with Section 12.B and Section 12.C, and if you and your owners and the transferee comply with the conditions in Section 12.B and Section 12.C.
If you do not complete the sale to the proposed buyer within 60 days after we notify you that we do not intend to exercise our right of first refusal, or if there is a material change in the terms of the sale (which you agree to tell us promptly), we or our designee will have an additional right of first refusal on the same terms as described above.
13. RENEWAL OF YOUR FRANCHISE.
A. YOUR RIGHT TO RENEW YOUR FRANCHISE.
When this Agreement expires, you may renew your franchise to operate your Shop for two successive terms of 5 years each, if you meet the following conditions:
- (1) you give us written notice of your election to acquire a successor franchise no more than 270 days and no less than 180 days before this Agreement expires;
- (2) you and each of your owners have substantially complied with this Agreement at all times during the Term;
- (3) you maintain possession of the Premises pursuant to a Lease we have approved, which must have a Lease term no less than the full term of the renewal franchise;
- (4) you agree to remodel and/or expand your Shop, add or replace improvements, and otherwise modify your Shop as we require to comply with System Standards thenapplicable for new Jeni's Ice Creams Scoop Shops;
- (5) you pay us our renewal fee, which is 50% of the then-current initial franchise fee;
- (6) you and your owners have not violated any provision of this Agreement or any other agreement with us or our affiliates during both the 60-day period before you give us written notice of your election to acquire a successor franchise and on the date on which the term of the successor franchise commences, in full compliance with this Agreement including that you have paid all Royalties, Brand Fund Contributions, and other amounts owed to us, our affiliates, and third-party suppliers, and have submitted all required reports and statements;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, Cream has a right of first refusal when a franchisee seeks to transfer their franchise agreement or development rights. This means that before a franchisee can sell their franchise to a third party, they must first offer Cream the opportunity to purchase the franchise on the same terms.
If Cream decides not to exercise its right of first refusal, the franchisee is then free to proceed with the sale to the proposed buyer. However, this is contingent on completing the sale within 60 days of Cream's notification that they will not exercise their right. Additionally, the franchisee must promptly inform Cream of any material changes to the terms of the sale. Should the sale not be completed within this timeframe or if the terms change materially, Cream reserves the right to exercise an additional right of first refusal under the same original terms.
It is important to note that Cream's right of first refusal does not apply if the franchise is being transferred to a wholly-owned entity under specific conditions. These conditions include the entity conducting no other business than the operation of Cream Scoop Shops, the franchisee maintaining management control, and the franchisee owning 100% of the entity's economic interests and voting power. This exception allows franchisees to structure their business operations without triggering Cream's right to buy the franchise back during internal restructuring.
This right of first refusal is a standard clause in many franchise agreements, allowing Cream to maintain control over who becomes a franchisee and ensuring that any new franchisee meets their standards. Prospective franchisees should understand these conditions and timelines, as they can significantly impact the sale of their franchise.