Under what circumstances does Cream have a right of first refusal regarding a transfer of interest?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
F. OUR RIGHT OF FIRST REFUSAL.
If you or any of your owners wish to conduct a transfer described under Section 12.B and Section 12.C above, you (or your owners) agree to obtain from a responsible and fully disclosed buyer, and send to us, a true and complete copy of a bona fide written offer relating exclusively to an interest in you or in this Agreement and your Shop. The offer must include details of the payment terms of the proposed sale and the sources and terms of any financing for the proposed purchase price. To be a valid, bona fide offer, the proposed purchase price must be in a dollar amount, and the proposed buyer must submit with its offer an earnest money deposit equal to 5% or more of the offering price. We may require you (or your owners) to send us copies of any materials or information sent to the proposed buyer or transferee regarding the possible transaction.
We may elect to purchase the interest offered for the price and on the terms and conditions contained in the offer, provided that: (1) we notify you or your selling owner(s) that we intend to purchase the interest within 60 days after we receive a copy of the offer and all other information we request; (2) we may substitute cash for any form of payment proposed in the offer (such as ownership interests in a privately-held entity); (3) we or our designee will be offered the same terms for any promissory notes or other deferred payments as those offered by the proposed buyer; (4) we will have an additional 90 days to prepare for closing after notifying you of our election to purchase; and (5) we must receive, and you and your owners agree to make, all customary representations and warranties given by the seller of the assets of a business or the ownership interests 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
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 if a franchisee or any of their owners wish to conduct a transfer of interest as described under Section 12.B and Section 12.C. To initiate this process, the franchisee must obtain a bona fide written offer from a responsible and fully disclosed buyer. This offer must be exclusively related to an interest in the franchisee, the Franchise Agreement, or the Shop. The franchisee is then required to provide Cream with a true and complete copy of this offer.
The offer presented to Cream must include specific details such as the payment terms of the proposed sale, as well as the sources and terms of any financing intended to cover the purchase price. To be considered a valid offer, the proposed purchase price must be expressed in a dollar amount, and the potential buyer must include an earnest money deposit equivalent to 5% or more of the offering price. Cream also has the right to request copies of any materials or information shared with the proposed buyer or transferee regarding the potential transaction.
Cream may then elect to purchase the interest under the same price, terms, and conditions outlined in the offer. Cream must notify the franchisee or selling owner(s) of their intent to purchase the interest within 60 days of receiving the offer and all other requested information. Cream can substitute cash for any proposed form of payment, and will be offered the same terms for any promissory notes or deferred payments as the proposed buyer. Cream will have an additional 90 days to prepare for closing after notifying the franchisee of their election to purchase. The franchisee and their owners must also provide all customary representations and warranties given by the seller of the assets of a business or the ownership interests in any legal business entity. If Cream does not exercise their right of first refusal, the franchisee may proceed with the sale to the proposed buyer, provided that Cream approves the transfer and the franchisee, their owners, and the transferee comply with all specified conditions.