Can the arbitrator award interest on damages incurred for breach of the Cinnabon franchise agreement?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
The parties agree that the arbitrator may award interest from the date of any damages incurred for breach or other violation of this Agreement, and from the date of the award, until paid in full, at a rate to be fixed by the arbitrator, but in no event less than 2.5% per annum above the Citibank Preference Rate quoted for the corresponding periods, as reported in The Wall Street Journal, or the maximum rate permitted by applicable law, whichever is less.
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, in the event of arbitration, the arbitrator has the authority to award interest on damages incurred due to a breach or violation of the franchise agreement. This interest can be applied from the date the damages were incurred and continue until the award is fully paid.
The interest rate will be determined by the arbitrator, but it will not be less than 2.5% per annum above the Citibank Preference Rate quoted for the corresponding periods, as reported in The Wall Street Journal, or the maximum rate permitted by applicable law, whichever is less. This provision ensures that Cinnabon franchisees may receive compensation for the time value of money lost due to the breach, encouraging compliance with the franchise agreement.
This ability for the arbitrator to award interest is a standard practice in franchising, as it aims to make the injured party whole and account for the financial impact of the breach over time. However, the specific interest rate calculation provides a defined framework, limiting the arbitrator's discretion while ensuring a fair minimum rate of return for the franchisee.