What is the condition under which the Tenant retains possession of the leased premises for Cinnaholic?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
It is understood and agreed that so long as Franchisor shall not have exercised its option under the foregoing provisions hereof as to the Leased Premises, Franchisor shall not be liable for rent or any obligation of Tenant under and by virtue of or in connection with the Lease, and Tenant shall remain liable for such rent and obligations;
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the tenant, who is the franchisee, retains liability for rent and other obligations under the lease agreement as long as Cinnaholic has not exercised its option to take over the leased premises. This means that until Cinnaholic decides to step in and assume the lease, the franchisee is responsible for fulfilling all the terms of the lease, including timely rent payments and other responsibilities outlined in the lease agreement.
This arrangement protects Cinnaholic from being automatically liable for the franchisee's lease obligations. It allows Cinnaholic to evaluate the situation and decide whether taking over the lease is in its best interest. For a prospective franchisee, this highlights the importance of carefully reviewing and understanding the lease agreement, as they will be solely responsible for it unless Cinnaholic intervenes.
This clause also implies that Cinnaholic has the option, but not the obligation, to cure any default by the tenant under the lease. This provides Cinnaholic with a safety net, allowing them to protect their brand and the location if the franchisee is struggling. However, the franchisee remains primarily responsible for managing their lease obligations and ensuring compliance with the lease terms.