If Cinnabon terminates the franchise agreement and the franchisee owns the Accepted Location, what options does Cinnabon have regarding acquiring the location?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
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 under Section 17 (Default and Termination) and the franchisee or one of their affiliates owns the Accepted Location, Cinnabon has the option to purchase the location or lease it. The lease would be for an initial five-year term, with Cinnabon having the option to renew for one additional five-year term, with terms that are commercially reasonable.
If Cinnabon elects to purchase the Accepted Location, the purchase price will be determined by three independent appraisers if Cinnabon and the franchisee cannot agree on a price within a reasonable time. This valuation will be determined using the Appraisal Process. Cinnabon can also offset any amounts the franchisee owes them or their affiliates against the purchase price.
Prospective Cinnabon franchisees should note that these options are at Cinnabon's discretion. If Cinnabon chooses to exercise its option to purchase the property, the franchisee is obligated to comply with the requirements, including ensuring that any affiliated owner also complies. This could have significant financial implications for franchisees who own their location, as they may be forced to sell or lease the property to Cinnabon upon termination of the franchise agreement.