What is the cure period Cinnaholic provides to address a default under the Development Agreement before a franchisee can terminate?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary | |
|---|---|---|---|
| a. | Length of the franchise term | Section 2.1 | 10 years |
| b. | Renewal or extension of the term | Section 2.2 | If you meet the requirements, you can renew for one additional consecutive 10 year term; after that you will have no right to renew the Franchise Agreement. |
| c. | Requirements for franchisee to renew or extend | Section 2.2 | You must: provide written notice of election to renew; not be in default of the Franchise Agreement or any other agreement relating to the Bakery; sign the then-current form of Franchise Agreement; pay a renewal fee; refurbish the Bakery, if required; complete any required retraining program; sign the current form of general release in Exhibit J to this Disclosure Document; and maintain ownership or leasehold interest in the Bakery location or secure a suitable alternative. Terms of the then-current form of Franchise Agreement may differ materially from any and all of those contained in the Franchise Agreement attached to this Disclosure Document. |
| 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. |
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 terminate the agreement only if Cinnaholic fails to cure a default under the Franchise Agreement within 90 days, or 150 days in some instances, after the franchisee provides written notice of termination.
This means that if Cinnaholic breaches the agreement, the franchisee must first notify Cinnaholic in writing. Cinnaholic then has a period of either 90 or 150 days to correct the issue. Only after this cure period expires without resolution can the franchisee proceed with terminating the agreement.
The length of the cure period could be critical for a franchisee. A longer cure period provides Cinnaholic with more time to rectify the default, potentially preserving the franchise relationship. However, it also means the franchisee must wait longer before being able to terminate and potentially pursue other opportunities. The specific circumstances that warrant a 150-day cure period instead of 90 days are not detailed in this excerpt.
It is important for prospective Cinnaholic franchisees to understand the specific conditions that trigger the different cure periods (90 vs. 150 days) and to assess whether these timeframes are reasonable given the potential defaults that could occur under the Franchise Agreement. Further clarification on what constitutes a "default" and the specific instances that would extend the cure period to 150 days should be sought from Cinnaholic during the due diligence process.