According to the Cinnabon franchise agreement, what actions constitute a 'Transfer'?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
16.1 Definition of Transfer. For purposes of this Agreement, "Transfer" as a verb means to sell, assign, give away, transfer, pledge, mortgage, or encumber, either voluntarily or by operation of law (such as through divorce or bankruptcy proceedings), any interest in this Agreement, the Franchised Business, substantially all the assets of the Franchised Business, or in the ownership of the franchisee (if you are an Entity). "Transfer" as a noun means any such sale, assignment, gift, transfer, pledge, mortgage, or encumbrance. A "Control Transfer" means any Transfer of (i) this Agreement or any interest in this Agreement; (ii) the Franchised Business or all or substantially all of the Franchised Business's assets; or (iii) any Controlling Interest (defined below) in you (if you are an Entity), whether directly or indirectly through a transfer of legal or beneficial ownership interests in any Owner that is an Entity, and whether in one transaction or a series of related transactions, regardless of the time period over which these transactions take place. References to a "Controlling Interest" in you mean either (i) 20% or more of the direct or indirect legal or beneficial ownership interests in your Entity or (ii) the acquisition of an ownership interest or other right or interest which grants the power (whether directly or indirectly) to direct or
cause the direction of management and polices of you or the Franchised Business to any individual or Entity, or group of individuals or Entities, that did not have that power before that acquisition.
- 16.2 No Transfer Without Our Consent.
This Agreement and the license are personal to you, and we have granted the license in reliance on your (and, if you are an Entity, your Owners') business skill, financial capacity, and personal character.
Accordingly, neither you nor any of the Owners or any successors to any part of your interest in this Agreement or the license may make any Transfer or permit any Transfer to occur without obtaining our prior written consent.
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to the 2025 Cinnabon Franchise Disclosure Document, a 'Transfer' encompasses a range of actions related to the franchise agreement, the franchised business, its assets, or the ownership of the franchisee entity. Specifically, 'Transfer' means to sell, assign, give away, transfer, pledge, mortgage, or encumber any interest in the agreement, the business, or its assets. This can occur either voluntarily or by operation of law, such as through divorce or bankruptcy proceedings.
A 'Control Transfer' is defined more specifically as any transfer of the franchise agreement itself, any interest in the agreement, the franchised business or substantially all of its assets, or any controlling interest in the franchisee entity. A 'Controlling Interest' means ownership of 20% or more of the direct or indirect legal or beneficial ownership interests in the franchisee entity. It also includes acquiring an ownership interest or other right that grants the power to direct the management and policies of the franchisee or the franchised business.
Cinnabon emphasizes that the franchise agreement and license are personal to the franchisee, granted in reliance on their business skill, financial capacity, and personal character. Therefore, franchisees, their owners, or successors cannot make any transfer or permit any transfer to occur without obtaining Cinnabon's prior written consent. This requirement underscores Cinnabon's control over who operates its franchises and maintains brand standards.
This definition of 'Transfer' is fairly standard in franchising. It is important for a prospective Cinnabon franchisee to understand these restrictions, as failure to comply with the transfer requirements could result in a breach of the franchise agreement. Franchisees should carefully review Article 16 of the franchise agreement to fully understand the implications of transferring their business or ownership interest.