If Cinnabon terminates the franchise agreement, does Cinnabon have the right to operate the Franchised Business?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
- A.
Right to Operate.
If we terminate this Agreement under Section 17 (Default and Termination), we will have the right to immediately enter and take possession of your Franchised Business to maintain continuous operation of the Franchised Business, provide for orderly change of management and disposition of personal property, and otherwise protect our interests.
If we exercise this right, you will vacate the Franchised Business promptly and completely, rendering all necessary assistance to us to enable us to take prompt possession, and you will have no right to any revenue that we earn while operating the Franchised Business.
If you dispute the validity of our termination of this Agreement, we will nevertheless have the option, which you irrevocably grant, to operate the Franchised Business pending the final, unappealed determination of the dispute under this Agreement.
If an arbitrator or court of competent jurisdiction makes a final, unappealed determination that the termination was not valid, we will make a full and complete accounting for the period during which we operated the Franchised Business.
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 the franchisee's default, Cinnabon has the right to take immediate possession of the franchised business. This allows Cinnabon to maintain continuous operation, manage the transition, dispose of personal property, and protect its interests.
If Cinnabon exercises this right, the franchisee must promptly vacate the premises and provide all necessary assistance to facilitate Cinnabon's takeover. The franchisee will not be entitled to any revenue earned by Cinnabon during this period of operation. This clause ensures that Cinnabon can maintain brand presence and operational continuity even after terminating an agreement due to franchisee default.
Even if the franchisee disputes the termination's validity, Cinnabon retains the option to operate the franchise until a final, unappealed decision is made. Should an arbitrator or court determine that the termination was invalid, Cinnabon is obligated to provide a full accounting of the business's operations during the period it was under Cinnabon's control. This provision balances Cinnabon's need to maintain operations with the franchisee's right to challenge the termination, ensuring financial accountability if the termination is overturned.