What rights does Cinnabon have if a Cinnabon franchisee defaults under the Lease or the Franchise Agreement?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
eets the requirements of this Section 5.4. We will have the right, but not the obligation, to review your Site Agreement prior to its execution to verify its compliance with this Section 5.4.
B. Site Agreement Restrictions. If you execute a Site Agreement, (i) you may not create any obligations on our behalf, grant any rights adverse to our rights, or agree to any other term that is inconsistent with any term of this Agreement; (ii) you must duly and timely perform all terms under the Site Agreement; and (iii) except as otherwise provided in this Agreement, you may not assign, encumber, or transfer the Site Agreement, or sublet all or any part of the Accepted Location, without our prior written approval, which approval will not be unreasonably withheld. You must ensure that all Site Agreements comply with any terms set forth in the Manuals.
C. Preferred Lease Terms. You must use commercially reasonable efforts to ensure that all Leases include, unless we agree otherwise in writing:
(i) a provision which requires the landlord concurrently to provide us with a copy of any written notice of breach or default under the Lease sent to you, and which grants to us the right (but not the obligation) to cure any defaults under the Lease within a reasonable time (not to exceed 15 days for monetary defaults and 30 days for non-monetary defaults);
(ii) a provision that provides that upon the expiration or termination of this Agreement or upon your default under the Lease or under this Agreement, we will, without your or the landlord's further consent, have (a) a continuing right of entry into the Franchised Business, (b) the right to operate a Business at the Accepted Location, (c) the right, but not the obligation, to assume your interests under the existing terms, conditions and covenants of the Lease, and (d) should we assume your position under the Lease, the right to assign the Lease or sublet the premises to a third party which will operate a Business at the location;
(iii) a provision that provides that upon expiration or termination of the Lease, we will, without your or the landlord's further consent, have a continuing right of entry into the Franchised Business to remove Proprietary Products and any materials bearing the Marks;
(iv) a provision that provides that the Lease may not be modified or amended without our written consent which will not unreasonably be withheld, conditioned or delayed by us;
(v) a provision that allows you to offer or distribute product samples outside or over the counter of the Franchised Business, as applicable;
(vi) a provision that provides that if we assume your obligations and replace you as the lessee under the Lease or sign a new lease, and we later reassign the Lease or new lease to another franchisee, we will not be liable for any obligations to landlord under the Lease or new lease after the reassignment;
(vii) a provision, or a separate collateral assignment of lease, that provides that your landlord reserves to us the right, at our election, to take an assignment of the leasehold interest and to occupy the Accepted Location for the Franchised Business upon termination or expiration of this Agreement or default under the Lease; and
(viii) a provision that provides that your Franchised Business will have at least one designated parking space for curb-side pickup.
D. Site Agreement Modifications.
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to the 2025 Cinnabon Franchise Disclosure Document, Cinnabon seeks to protect its interests in the event of a franchisee default under the lease or franchise agreement. Cinnabon requires that all leases include a provision that the landlord must provide Cinnabon with a copy of any default notice sent to the franchisee. This provision also grants Cinnabon the right, but not the obligation, to cure any defaults, with a reasonable timeframe of 15 days for monetary defaults and 30 days for non-monetary defaults. This allows Cinnabon to step in and rectify the situation, potentially preventing a store closure and maintaining brand presence.
Furthermore, upon the expiration or termination of the Franchise Agreement or a franchisee's default under the lease or the Franchise Agreement, Cinnabon has several rights. These include the right to enter the franchised business, operate a business at the location, and assume the franchisee's interests under the existing lease terms without needing consent from the franchisee or landlord. If Cinnabon assumes the lease, it also has the right to assign the lease or sublet the premises to a third party who will operate a Cinnabon business at the location. This ensures Cinnabon can maintain a presence in the location even if the original franchisee fails.
Additionally, Cinnabon retains the right to enter the franchised business to remove proprietary products and materials bearing Cinnabon's trademarks upon the expiration or termination of the lease. The lease cannot be modified or amended without Cinnabon's written consent, which Cinnabon will not unreasonably withhold, condition, or delay. These stipulations are designed to protect Cinnabon's brand standards and control over its locations. If Cinnabon assumes the lease and later reassigns it to another franchisee, Cinnabon will not be liable for any obligations to the landlord after the reassignment. This clause limits Cinnabon's long-term liability related to the lease.
If Cinnabon terminates the Franchise Agreement due to a franchisee's default, Cinnabon has the option to require the franchisee to assign their interest in the lease to Cinnabon or another designated franchisee. The franchisee must then vacate the premises and assist in the transfer of possession. If the franchisee or an affiliate owns the location, Cinnabon can elect to purchase or lease the location. If Cinnabon and the franchisee cannot agree on a purchase price, it will be determined by three independent appraisers. Cinnabon can also offset any amounts owed by the franchisee against payments for the purchase of the location. These measures provide Cinnabon with significant control over the location and ensure a smooth transition in the event of a termination.