What happens if the Cinnabon franchisee loses possession of the Accepted Location?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
If we terminate this Agreement under Section 17 (Default and Termination), you will, at our option, assign to us, or another franchisee we designate, your interest in any Lease for the Accepted Location, and will vacate the Franchised Business promptly and completely, rendering all necessary assistance to us or the other franchisee to enable it to take prompt possession.
If you or one of your affiliates owns the Accepted Location, we may elect to purchase the Accepted Location or, at our option, lease the Accepted Location from you or that affiliate for an initial five-year term with one renewal term of five years (at our option) on commercially reasonable terms.
If you and we cannot agree on a
purchase price for the Accepted Location in a reasonable time, the purchase price will be determined by three independent appraisers using the Appraisal Process. If we elect to exercise this option to purchase, we may set off all amounts you owe us or our affiliates under this Agreement against any payments for the purchase. You (and your Owners) agree to cause your affiliate to comply with these requirements.
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, if Cinnabon terminates the franchise agreement due to franchisee default, Cinnabon has specific rights regarding the Accepted Location. Cinnabon has the option to require the franchisee to assign their interest in any lease for the Accepted Location to Cinnabon or another franchisee designated by Cinnabon. The franchisee must then promptly and completely vacate the franchised business, providing all necessary assistance to enable Cinnabon or the new franchisee to take possession.
If the franchisee or an affiliate owns the Accepted Location, Cinnabon can choose to purchase the location or lease it from the franchisee or their affiliate. The initial lease term would be five years, with an option for Cinnabon to renew for another five years, based on commercially reasonable terms. If Cinnabon and the franchisee cannot agree on a purchase price within a reasonable timeframe, the price will be determined by three independent appraisers using an Appraisal Process.
If Cinnabon chooses to purchase the Accepted Location, it can offset any amounts the franchisee owes to Cinnabon or its affiliates under the franchise agreement against the purchase payments. The franchisee and their owners must ensure that their affiliate complies with these requirements. This clause ensures that Cinnabon can maintain control over the location and continue operating a Cinnabon business there, even if the original franchisee defaults and loses possession.