What happens if a Cinnabon franchisee's bank accounts are attached?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee is responsible for maintaining sufficient funds in the Designated Bank Account for all Comprehensive Support Fees due under this Agreement, in addition to any amounts drafted by EFT under the Franchise Agreement and the Manuals.
In the event there are insufficient funds in the Designated Bank Account to cover the draft of a payment due hereunder, Company reserves the right to charge Franchisee the return costs charged by Franchisor's bank and an administrative fee to cover Franchisor's and/or Company's cost of addressing the nonpayment.
Such administrative fee is in addition to any interest on the amount due.
- c.
Designated Bank Account.
As used herein, the term "Designated Bank Account" means the bank account on file with Franchisor for EFT payments required under the Franchise Agreement or Manuals.
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
The 2025 Cinnabon Franchise Disclosure Document does not specify what happens if a franchisee's bank accounts are attached. However, the document does outline the franchisee's responsibilities regarding maintaining sufficient funds in their designated bank account for Comprehensive Support Fees and other payments.
Specifically, the franchisee is responsible for ensuring sufficient funds are available in the Designated Bank Account for all Comprehensive Support Fees, as well as any amounts drafted via Electronic Funds Transfer (EFT) as per the Franchise Agreement and Manuals. The 'Designated Bank Account' refers to the account on file with Cinnabon for EFT payments required by the Franchise Agreement or Manuals.
If there are insufficient funds in the Designated Bank Account to cover a payment, Cinnabon reserves the right to charge the franchisee the return costs levied by the franchisor's bank. Additionally, Cinnabon may impose an administrative fee to cover the franchisor's or company's costs associated with addressing the nonpayment. This administrative fee is separate from any interest accrued on the overdue amount. Interest on past due amounts is charged at a rate of 1.5% per month, or the maximum rate permitted by law.
To fully understand the implications of a bank account attachment, a prospective Cinnabon franchisee should inquire with the franchisor about the specific procedures and potential consequences, including possible default scenarios and remedies available to Cinnabon in such situations. This information is crucial for assessing the financial risks associated with the franchise.