What is the condition that allows a Cinnaholic franchisee to terminate the Development Agreement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary | |
|---|---|---|---|
| d. | Termination by franchisee | Section 21.1 | You can terminate only if we fail to cure a default under the Franchise Agreement within 90 days (or 150 days in some instances) after you give us written notice of termination. |
| e. | Termination by franchisor without cause | Not Applicable | Not Applicable. Termination of the Development Agreement does not allow for the termination of any then in force Franchise Agreement. Termination of any Franchise Agreement does not allow for termination of the Development Agreement, so long as Franchisee is otherwise in compliance with its development schedule. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 42–50)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a franchisee can only terminate the Franchise Agreement if Cinnaholic fails to correct a default under the Franchise Agreement within 90 days, or in some instances, 150 days, after the franchisee provides written notice of termination.
This condition is important for prospective Cinnaholic franchisees because it outlines the limited circumstances under which they can terminate the agreement. Unlike some franchise systems that might offer termination for convenience or other reasons, Cinnaholic's agreement only allows termination if Cinnaholic is in default and fails to cure it within a specified timeframe. This places a significant burden on the franchisee to demonstrate Cinnaholic's failure to meet its obligations before termination is possible.
It is also important to note that the termination of the Development Agreement does not allow for the termination of any then in force Franchise Agreement, and vice versa, as long as the franchisee is otherwise in compliance with its development schedule. This means that even if a franchisee terminates the Development Agreement, any existing franchise agreements remain in effect, and the franchisee must continue to operate those locations or risk further penalties.
Prospective franchisees should carefully consider this provision and seek legal counsel to fully understand their rights and obligations under the Cinnaholic Franchise Agreement and Development Agreement. Understanding the specific conditions that trigger the right to terminate is crucial for managing the risks associated with investing in a Cinnaholic franchise.