What happens if the transferee of a Cinnabon franchise owns an interest in another business or franchise licensed by one of Cinnabon's affiliates and is in default?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
If the transferee, its affiliates, or any of its directors, officers, shareholders, partners, members, or managers owns an interest in another Business or another franchise licensed by one of our affiliates, those individuals or Entities must (i) at the time of the Transfer request or the Transfer closing, not be in default in any material respect under any agreement with us, any of our affiliates, or any suppliers, (ii) during the previous two years, not have been in default in any material respect under any agreement with us, our affiliates, or any suppliers without curing such default within the applicable cure period, and (iii) in our sole judgment, have been approved to develop and operate additional franchises.
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to the 2025 Cinnabon FDD, if the transferee, its affiliates, or any of its directors, officers, shareholders, partners, members, or managers owns an interest in another business or another franchise licensed by one of Cinnabon's affiliates, specific conditions must be met to proceed with the transfer. These individuals or entities must not be in default in any material respect under any agreement with Cinnabon, its affiliates, or any suppliers at the time of the transfer request or closing.
Furthermore, during the previous two years, they must not have been in default in any material respect under any agreement with Cinnabon, its affiliates, or any suppliers without curing such default within the applicable cure period. Finally, Cinnabon must approve them to develop and operate additional franchises in its sole judgment.
In practical terms, this means that a prospective Cinnabon franchisee who is part of a transferring entity with existing business interests must ensure that all related businesses are in good standing with Cinnabon and its affiliates. Any history of uncured defaults could jeopardize the transfer. Cinnabon retains the right to deny the transfer if it determines that the transferee's related business interests do not meet its standards for operating additional franchises.