What constitutes 'substantial compliance' with the Cinnaholic franchise agreement for the franchisee?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee may terminate this Agreement if Franchisee is in substantial compliance with this Agreement and Franchisor materially breaches this Agreement and fails to cure such material breach within 90 days after written notice thereof is delivered to Franchisor.
Notwithstanding the foregoing, if the breach is curable but is of a nature which cannot reasonably be cured with such 90 day period and Franchisor has commenced and is continuing to make good faith efforts to cure such breach, Franchisor shall be given an additional 60 day period to cure the same, and this Agreement shall not terminate.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a franchisee may terminate the Franchise Agreement if they are in 'substantial compliance' with the agreement, and Cinnaholic materially breaches the agreement, failing to cure the breach within 90 days after written notice. If the breach is curable but cannot reasonably be cured within 90 days, and Cinnaholic is making good faith efforts to cure it, Cinnaholic is given an additional 60 days to cure the breach.
This clause protects the franchisee, allowing them to end the agreement if Cinnaholic fails to meet its obligations, provided the franchisee is itself compliant. The 90-day cure period (extendable by 60 days) gives Cinnaholic time to rectify any issues before termination can occur. This is a fairly standard clause in franchise agreements, providing a mechanism for franchisees to exit the agreement if the franchisor is not fulfilling its obligations.
However, the FDD does not define 'substantial compliance.' This lack of clarity could lead to disputes between Cinnaholic and its franchisees regarding whether the franchisee has met the threshold for being in 'substantial compliance,' potentially complicating the termination process. A prospective franchisee should seek clarification from Cinnaholic regarding the specific criteria used to determine 'substantial compliance' to fully understand their rights and obligations under the agreement.