What buy-back provisions are included in the Cinnaholic franchise agreement that permit the franchisor to repurchase the franchisee's business?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
- **8.
Certain Buy-Back Provisions.** Provisions in franchise agreements or related agreements that permit the franchisor to repurchase the franchisee's business for any reason during the term of the franchise
agreement without the franchisee's consent are unlawful pursuant to RCW 19.100.180(2)(j), unless the franchise is terminated for good cause.
- (C) A PROVISION THAT PERMITS A FRANCHISOR TO TERMINATE A FRANCHISE BEFORE THE EXPIRATION OF ITS TERM EXCEPT FOR GOOD CAUSE.
GOOD CAUSE SHALL INCLUDE THE FAILURE OF THE FRANCHISEE TO COMPLY WITH ANY LAWFUL PROVISIONS OF THE FRANCHISE AGREEMENT AND TO CURE SUCH FAILURE AFTER BEING GIVEN WRITTEN NOTICE THEREOF AND A REASONABLE OPPORTUNITY, WHICH IN NO EVENT NEED BE MORE THAN 30 DAYS, TO CURE SUCH FAILURE.
- (D) A PROVISION THAT PERMITS A FRANCHISOR TO REFUSE TO RENEW A FRANCHISE WITHOUT FAIRLY COMPENSATING THE FRANCHISEE BY REPURCHASE OR OTHER MEANS FOR THE FAIR MARKET VALUE, AT THE TIME OF EXPIRATION, OF THE FRANCHISEE'S INVENTORY, SUPPLIES, EQUIPMENT, FIXTURES, AND FURNISHINGS.
PERSONALIZED MATERIALS WHICH HAVE NO VALUE TO THE FRANCHISOR AND INVENTORY, SUPPLIES, EQUIPMENT, FIXTURES, AND FURNISHINGS NOT REASONABLY REQUIRED IN THE CONDUCT OF THE FRANCHISED BUSINESS ARE NOT SUBJECT TO COMPENSATION.
- **2.
Franchisee Bill of Rights.** RCW 19.100.180 may supersede provisions in the franchise agreement or related agreements concerning your relationship with the franchisor, including in the areas of termination and renewal of your franchise.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 27–35)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, certain state laws impact the franchisor's ability to repurchase a franchisee's business. For instance, Washington state law dictates that the Washington Franchise Investment Protection Act supersedes any conflicting terms in the franchise agreement regarding the franchisee's relationship with Cinnaholic, including termination and renewal terms.
In Michigan, a provision that allows Cinnaholic to terminate a franchise before its term expires is void unless there is good cause, which includes the franchisee's failure to comply with the franchise agreement after receiving written notice and a reasonable opportunity to correct the failure (no more than 30 days). Additionally, a provision that allows Cinnaholic to refuse renewal without fairly compensating the franchisee for the fair market value of their inventory, supplies, equipment, fixtures, and furnishings is also void. Compensation is not required for personalized materials or items not reasonably required for the franchised business.
Furthermore, Washington state law specifies that provisions in franchise agreements allowing Cinnaholic to repurchase the franchisee's business for any reason during the franchise term without the franchisee's consent are unlawful, unless the franchise is terminated for good cause. These regulations aim to protect franchisees from potentially unfair or overreaching practices by the franchisor.