Under what condition does the Cream Franchise Agreement allow for termination?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
deficiencies, we may revoke any approval of such a renewal franchise we may have awarded. If you fail to notify us of your election to acquire a renewal franchise within the prescribed time period, we need not grant you a renewal franchise.
14. TERMINATION OF AGREEMENT.
A. AUTOMATIC.
This Agreement and all rights granted to you in this Agreement shall automatically terminate without notice if: (1) you make an assignment for the benefit of creditors; (2) you consent to the appointment of a receiver, trustee, or liquidator of all or the substantial part of your property; (3) your Shop is attached, seized, subjected to a writ or distress warrant, or levied upon, unless the attachment, seizure, writ, warrant, or levy is vacated within 30 days; (4) any order appointing a receiver, trustee, or liquidator of you or your Shop is not vacated within 30 days following the order's entry; and/or (5) you or any of your owners file a petition in bankruptcy or a petition in bankruptcy is filed against you.
B. BY YOU.
If you and your owners are fully complying with this Agreement and we materially fail to comply with this Agreement and do not correct the failure within 30 days after you deliver written notice of the material failure to us or if we cannot correct the failure within 30 days and we fail to give you within 30 days after your notice reasonable evidence of our effort to correct the failure within a reasonable time, you may terminate this Agreement effective an additional 30 days after you deliver to us written notice of termination. Your termination of this Agreement other than according to this Section 14.B will be deemed a termination without cause and a breach of this Agreement.
C. BY US.
We may terminate this Agreement, effective upon delivery of written notice to you, if:
(1) you or any of your owners have made or make any material misrepresentation or omission in acquiring the rights under this Agreement or in operating your Shop;
- (2) you do not obtain lawful possession of a Premises we have approved and deliver to us a fully executed copy of the Lease and lease addendum we have approved for such Premises, in each case by the deadline set forth in Section 2.B;
- (3) you do not satisfy all of your development obligations specified in this Agreement, including obtaining our approval prior to opening your Shop, and open your Shop for business by the deadline specified in Section 2.C;
- (4) your Mandatory Trainees do not satisfactorily complete the Initial Training Program;
- (5) you abandon or fail to actively operate your Shop for more than 3 consecutive days of operation, or you provide us or any other party notice (written or oral) that you intend to permanently close or otherwise abandon the operation of your Shop;
- (6) you or any of your owners are or have been convicted of or have pleaded no contest or guilty to a felony;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 Cream Franchise Disclosure Document, the Franchise Agreement can be terminated under several conditions, both automatically and by either the franchisee or Cream.
Cream can automatically terminate the agreement without notice if the franchisee makes an assignment for the benefit of creditors, consents to the appointment of a receiver, trustee, or liquidator, or if the Cream shop is attached, seized, or levied upon and not vacated within 30 days. Similarly, Cream can automatically terminate the agreement if an order appointing a receiver, trustee, or liquidator is not vacated within 30 days, or if the franchisee files for bankruptcy or a bankruptcy petition is filed against them.
Cream may also terminate the agreement if the franchisee violates any law related to their development rights and fails to correct it within 72 hours after notice, fails to pay amounts due to Cream or its affiliates within 10 days after written notice, or fails to comply with the agreement on three or more occasions within a 12-month period. Additionally, Cream can terminate if the franchisee fails to comply with any other provision of the agreement and does not correct it within 30 days' notice, or if the franchisee fails to comply with any other agreement with Cream or its affiliate and does not correct such failure within the applicable cure period.
Conversely, the franchisee can terminate the agreement if they are fully complying with the agreement and Cream materially fails to comply with the agreement and does not correct the failure within 30 days after written notice. If Cream cannot correct the failure within 30 days, they must provide reasonable evidence of their effort to correct the failure within a reasonable time, or the franchisee may terminate the agreement with an additional 30 days' written notice. Terminating the agreement outside of these conditions will be considered a termination without cause and a breach of the agreement.