If a Cinnabon franchisee is in default with an Approved Supplier, does this affect their ability to transfer the franchise?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
- A.
You notify us in writing at least 90 days prior to any proposed Control Transfer and provide all requested information at least 60 days prior to any proposed Control Transfer.
- B.
All sums you owe us and our affiliates are paid.
- C.
You are not (i) at the time of the Transfer request or the Transfer closing, in default in any material respect under this Agreement or any other agreement with us, or any of our affiliates, or any of our Approved Suppliers and (ii) you have not been during the Term, in default in any material respect under this Agreement or any other agreement with us, any of our affiliates, or any of our Approved Suppliers without curing such default within the applicable cure period.
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, a franchisee's ability to transfer their franchise is contingent upon several conditions. One critical condition is that the franchisee must not be in default in any material respect under any agreement with Cinnabon, its affiliates, or its Approved Suppliers at the time of the transfer request or closing. Furthermore, the franchisee must not have been in default during the term of the agreement without curing such default within the applicable cure period.
This means that if a Cinnabon franchisee is in default with an Approved Supplier, whether it be for non-payment or any other material breach of contract, they will likely be unable to transfer their franchise. This provision protects Cinnabon and its supply chain by ensuring that franchisees meet their financial and contractual obligations before transferring the business to a new owner. The prospective transferee also cannot be in default with Cinnabon, its affiliates, or any suppliers.
This requirement is fairly standard in franchising, as franchisors typically want to ensure that new franchisees are financially stable and capable of meeting the brand's standards. For a prospective Cinnabon franchisee, this underscores the importance of maintaining good relationships with suppliers and adhering to all contractual obligations to avoid jeopardizing the future sale of their franchise. It also highlights the need to resolve any defaults promptly and within the specified cure period to maintain eligibility for a franchise transfer.