What constitutes an unauthorized transfer of the Cinnaholic franchise agreement, the franchise, the Bakery, or an ownership interest in Franchisee?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall not subfranchise, sell, assign, transfer, merge, convey or encumber (each, a "Transfer"), the Bakery, the Franchised Site, this Agreement or any of its rights or obligations hereunder, or suffer or permit any such Transfer of the Bakery, the Franchised Site, this Agreement or its rights or obligations hereunder to occur by operation of law or otherwise without the prior express written consent of Franchisor.
In addition, if Franchisee is a corporation, limited liability company, partnership, business trust, or similar association or entity, the shareholders, members, partners, beneficiaries, investors or other equity holders, as the case may be, may not Transfer their equity interests in such corporation, limited liability company, partnership, business trust, or similar association or entity, without the prior written consent of Franchisor.
Furthermore, in the event that any shareholder, member, partner, investor or other equity holder of Franchisee (the "Equity Holder") is a corporation, limited liability company, partnership, business trust, or similar association or entity, the interests of the shareholders, members, partners, beneficiaries, investors or other equity holders, as the case may be, in such Equity Holder, may not be Transferred, without the prior written consent of Franchisor.
Franchisor will not unreasonably withhold consent to a Transfer provided the requirements of Section 19.4 have been satisfied.
Any Transfer in violation of this Section shall be void and of no force and effect.
In the event Franchisee or an Equity Holder is a corporation, limited liability company, partnership, business trust, or similar association or entity with certificated equity interests, all stock or equity certificates of Franchisee or Equity Holder, as the case may be, shall have conspicuously endorsed upon them a legend in substantially the following form:
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, an unauthorized transfer occurs when a franchisee attempts to subfranchise, sell, assign, transfer, merge, convey, or encumber the Bakery, the Franchised Site, the Franchise Agreement, or any associated rights or obligations without obtaining prior express written consent from Cinnaholic. This restriction applies whether the transfer is done directly or occurs by operation of law.
For franchisees that are corporations, limited liability companies, partnerships, business trusts, or similar entities, any transfer of equity interests (shares, membership, partnership, etc.) by the equity holders also requires Cinnaholic's prior written consent. Furthermore, if an equity holder is itself a similar type of entity, any transfer of equity interests in that equity holder also necessitates Cinnaholic's approval.
Cinnaholic states that it will not unreasonably withhold consent to a transfer if the requirements outlined in Section 19.4 of the agreement are met. Any transfer conducted without the required consent is considered void and without legal effect. To ensure compliance, Cinnaholic requires that all stock or equity certificates of the franchisee or equity holder bear a specific legend indicating that the shares are subject to transfer restrictions.