Does Cinnaholic or any affiliate guarantee any leases for franchisees?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
During the fiscal year ended December 31, 2024, neither we, nor our affiliates, received any revenues from required purchases and leases.
Site Approval and Construction. We must approve the site for your Bakery and the site must meet our then-current site criteria. If you lease the site for your Bakery, you must collaterally assign your lease to us by signing the form of Collateral Assignment of Lease attached as an exhibit to the Development Agreement and have your landlord sign the Collateral Assignment of Lease consenting to the assignment. Under the Collateral Assignment of Lease, we will be granted the right, but not the obligation, to take possession of your Bakery's premises if your franchise agreement is terminated.
Source: Item 10 — FINANCING (FDD page 27)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic does not guarantee any leases for franchisees. However, if a franchisee leases a site for their Cinnaholic bakery, they must collaterally assign the lease to Cinnaholic by signing the Collateral Assignment of Lease form attached as an exhibit to the Development Agreement. The franchisee must also ensure that their landlord signs the Collateral Assignment of Lease, consenting to the assignment.
Under the Collateral Assignment of Lease, Cinnaholic is granted the right, but not the obligation, to take possession of the bakery's premises if the franchise agreement is terminated. This means that while Cinnaholic doesn't guarantee the lease, they have the option to assume it under certain circumstances, such as a terminated franchise agreement.
This arrangement protects Cinnaholic's interests by allowing them to potentially continue operating a location even if the original franchisee is no longer in the system. For a prospective franchisee, this highlights the importance of understanding the terms of the lease and the conditions under which Cinnaholic might exercise its right to take over the premises. Franchisees should carefully review the Collateral Assignment of Lease and discuss any concerns with Cinnaholic before signing the agreement.