Is a transfer fee due upon the death or permanent incapacity of a Cinnabon franchisee?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provisions | Section in Franchise Agreement | Summary |
|---|---|---|
| o. You must comply with our right of first refusal. p. If you operate a Co-Branded Bakery, the Co-Branded Agreement or Co-Branded Franchise are transferred at the same time. | ||
| FA: 16.4 (non-control transfers) | a. You give us prior written notice of the transfer. b. You pay all sums owed. c. You are not in default d. Transferee meets qualifications e. Transferee signs assignment and guaranty f. You and your guarantors and owners sign a general release. g. You remain liable for pre-Transfer obligations. h.You pay us a Transfer Fee. | |
| FA: 16.5 (related party transfers) | a. You give us prior written notice of the transfer. b. You are not in default c. Transferee meets qualifications d. Transferee assumes in writing the Franchise Agreement and the guaranty. e. You may not be in default under the Franchise Agreement. f. You pay us a Transfer Fee. g. You and your guarantors and owners must sign a general release and remain liable for pre-Transfer obligations | |
| n. Our right of first refusal to acquire your business | FA: 16.8 | We can match any offer for your Bakery or substantially all interest in your entity. |
| ES: 20.Q. | Above not applicable for an Express Bakery. | |
| o. Our option to | FA: 18.4 | We may purchase your Goods related to the Bakery at the fair |
| purchase your | market value (exclusive of good will) and may purchase your | |
| business | Accepted Location if you own it or your interest in any lease. | |
| ES: 20.U. | Above not applicable for an Express Bakery. | |
| p. Your death or disability | FA: 16.6 | Upon 180 days from your death or permanent incapacity you must transfer all rights and interests to buyer that complies with Transfer provisions, except no Transfer Fee will be due. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 93–100)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, in the event of a franchisee's death or permanent incapacity, a transfer of the franchise rights and interests must occur within 180 days. The key benefit to the franchisee's estate or successor is that no transfer fee will be due in this specific circumstance. This provision is outlined in Section 16.6 of the Franchise Agreement.
This waiver of the transfer fee can be a significant financial relief for the franchisee's family or estate, as transfer fees can often be a substantial cost. However, the transfer is still subject to other conditions. The buyer must comply with all other transfer provisions outlined in the Franchise Agreement.
This means the potential buyer must meet Cinnabon's qualifications, agree to the terms of the Franchise Agreement, and fulfill any other requirements for a standard transfer, except for the fee. This ensures that while the financial burden of the transfer fee is waived, Cinnabon still maintains control over who becomes a franchisee and that the brand standards are upheld. It is important to note that this condition applies specifically to transfers due to death or permanent incapacity, and other transfer scenarios will likely involve a transfer fee.