Under the Cream franchise agreement, what must a franchisee do if they, their employees, or representatives are deemed to have any interest in Innovations?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
to do all other lawfully permitted acts to further the purposes of this Section with the same legal force and effect as if executed by you.
7. RESTRICTIVE COVENANTS.
A. NON-COMPETITION DURING TERM.
We have granted you the rights in this Agreement in consideration of and reliance upon your agreement to deal exclusively with us. You therefore agree that, during the Term, you and your owners agree not to (and to use each of your best efforts to cause each of your respective current and former spouses, immediate family members, owners, officers, directors, representatives, affiliates, successors and assigns not to):
- (1) have any direct or indirect interest as an owner whether of record, beneficially, or otherwise – in a Competitive Business (defined below), wherever located or operating (except that equity ownership of less than 5% of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this subparagraph);
- (2) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating; or
- (3) divert or attempt to divert any actual or potential business or customer of any Jeni's Ice Creams Scoop Shop to a Competitive Business.
The term "Competitive Business" means any business (excluding any Jeni's Ice Creams Scoop Shop operated under a franchise agreement with us) operating or granting franchises or licenses to others to operate any business for which ice cream, ice cream-based desserts or drinks, and/or other frozen desserts or drinks, or similar products represents more than 10% of the total gross revenue.
B. NON-INTERFERENCE.
During and after the Term, you and your owners agree not to (and to use each of your best efforts to cause each of your respective current and former spouses, immediate family members, owners, officers, directors, employees, representatives, affiliates, successors and assigns not to) solicit, interfere, or attempt to interfere with our or our affiliates' relationships with any customers, franchisees, licensees, lenders, suppliers, or consultants.
C. NON-DISPARAGEMENT.
During and after the Term, you and your owners agree not to (and to use each of your best efforts to cause each of your respective current and former spouses, immediate family members, owners, officers, directors, employees, representatives, affiliates, successors, and assigns not to): (1) disparage or otherwise speak or write negatively, directly or indirectly, of us, our affiliates, any of our or our affiliates' directors, officers, employees, representatives or affiliates, current and former franchisees of us or our affiliates, the Jeni's® brand, the System, any Jeni's Ice Creams Scoop Shop, any business using the Marks, or any other brand concept operated, licensed, or franchised by us or our affiliates; or (2) take any other action which would, directly or indirectly, subject any of the foregoing to ridicule, scandal, reproach, scorn, or indignity, or which would negatively impact or injure the goodwill of the System or the Marks.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
Based on the 2025 Cream FDD, the document does not specify required actions if a franchisee, their employees, or representatives have an interest in "Innovations." However, the FDD does address non-compete and non-interference stipulations during and after the franchise term.
Specifically, during the term of the agreement, franchisees and their owners must not have any direct or indirect interest in a Competitive Business, defined as any business (excluding Cream shops) where ice cream or similar products represent more than 10% of gross revenue. An exception exists for equity ownership of less than 5% in a publicly traded Competitive Business. Franchisees also cannot perform services for a Competitive Business or divert business from Cream shops.
During and after the term, franchisees and their owners must not solicit or interfere with Cream's relationships with customers, franchisees, lenders, suppliers, or consultants. Franchisees are also prohibited from disparaging Cream, its affiliates, or its brand.
Since the FDD does not directly address the scenario of interest in "Innovations," it is important for prospective franchisees to seek clarification from Cream regarding any potential conflicts of interest or required disclosures related to such interests. This would ensure full compliance with the franchise agreement and avoid any potential disputes.