What constitutes 'good cause' for Cinnaholic to terminate a franchise agreement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
GOOD CAUSE SHALL INCLUDE, BUT IS NOT LIMITED TO:
- (i) THE FAILURE OF THE PROPOSED FRANCHISEE TO MEET THE FRANCHISOR'S THEN CURRENT REASONABLE QUALIFICATIONS OR STANDARDS.
- (ii) THE FACT THAT THE PROPOSED TRANSFEREE IS A COMPETITOR OF THE FRANCHISOR OR SUBFRANCHISOR.
- (iii) THE UNWILLINGNESS OF THE PROPOSED TRANSFEREE TO AGREE IN WRITING TO COMPLY WITH ALL LAWFUL OBLIGATIONS.
- (iv) THE FAILURE OF THE FRANCHISEE OR PROPOSED TRANSFEREE TO PAY ANY SUMS OWING TO THE FRANCHISOR OR TO CURE ANY DEFAULT IN THE FRANCHISE AGREEMENT EXISTING AT THE TIME OF THE PROPOSED TRANSFER.
- (H) A PROVISION THAT REQUIRES THE FRANCHISEE TO RESELL TO THE FRANCHISOR ITEMS THAT ARE NOT UNIQUELY IDENTIFIED WITH THE FRANCHISOR. THIS SUBDIVISION DOES NOT PROHIBIT A PROVISION THAT GRANTS TO A FRANCHISOR A RIGHT OF FIRST REFUSAL TO PURCHASE THE ASSETS OF A FRANCHISE ON THE SAME TERMS AND CONDITIONS AS A BONA FIDE THIRD PARTY WILLING AND ABLE TO PURCHASE THOSE ASSETS, NOR DOES THIS SUBDIVISION PROHIBIT A PROVISION THAT GRANTS THE FRANCHISOR THE RIGHT TO ACQUIRE THE ASSETS OF A FRANCHISE FOR THE MARKET OR APPRAISED VALUE OF SUCH ASSETS IF THE FRANCHISEE HAS BREACHED THE LAWFUL PROVISIONS OF THE FRANCHISE AGREEMENT AND HAS FAILED TO CURE THE BREACH IN THE MANNER PROVIDED IN SUBDIVISION (C).
- (I) A PROVISION WHICH PERMITS THE FRANCHISOR TO DIRECTLY OR INDIRECTLY CONVEY, ASSIGN, OR OTHERWISE TRANSFER ITS OBLIGATIONS TO FULFILL CONTRACTUAL OBLIGATIONS TO THE FRANCHISEE UNLESS PROVISION HAS BEEN MADE FOR PROVIDING THE REQUIRED CONTRACTUAL SERVICES.
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, the definition of 'good cause' for termination varies based on the state where the franchise operates. For franchisees in Michigan, 'good cause' includes the failure to comply with any lawful provision of the franchise agreement. In such cases, Cinnaholic must provide written notice of the failure and allow a reasonable opportunity to cure it, which need not be more than 30 days.
For Cinnaholic franchisees in general, 'good cause' includes, but is not limited to, several specific scenarios related to franchise transfers. These include the proposed franchisee's failure to meet Cinnaholic's current reasonable qualifications or standards, the proposed transferee being a competitor of Cinnaholic, the unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations, and the failure of the franchisee or proposed transferee to pay any sums owing to Cinnaholic or to cure any default in the franchise agreement at the time of the proposed transfer.
These stipulations protect Cinnaholic by ensuring franchisees adhere to brand standards and financial obligations, and by maintaining control over who becomes a franchisee, especially concerning transfers. However, the definition of 'good cause' is not exhaustive, meaning Cinnaholic may have other grounds for termination that are considered 'good cause' under applicable laws. Prospective franchisees should carefully review the franchise agreement and consult with legal counsel to fully understand their rights and obligations regarding termination.