Is a Cinnaholic Developer allowed to incur debt on behalf of the Franchisor?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
ral Firm to furnish to Franchisor, for Franchisor's written acceptance, a proposed preliminary site and construction plans and specifications (which plans and specifications shall have been adopted from the prototype plans provided by Franchisor) for the CINNAHOLIC® Bakery which, if accepted, shall not thereafter be modified, altered or changed without Franchisor's prior written consent. Developer shall sign such contacts or agreements required to obtain the services of the Architectural Firm.
- 8.4. Construction of Bakery. Developer shall furnish Franchisor with such information relating to the construction of the Bakery and development of the site as Franchisor may from time to time request, which may include, without limitation, copies of all commitments and plans for construction and financing, the contact name, address and telephone number for any lenders and contractors, and a copy of any construction or financing agreements. Developer shall commence construction of the CINNAHOLIC® Bakery in accordance with the accepted site and construction plans and specifications as soon as possible and shall complete construction thereof, including the acquisition and installation of all equipment specified by Franchisor, and have the Bakery ready to open for business within 12 months after Franchisor's execution of the Franchise Agreement for the Bakery. Franchisor and its agents shall have the right to inspect the construction site at any reasonable time without prior notice.
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
Based on the 2025 Cinnaholic Franchise Disclosure Document, the document does not explicitly state whether a Cinnaholic Developer is allowed to incur debt on behalf of the Franchisor. However, the FDD does state that the Developer is responsible for securing financing for the construction of the Bakery.
Specifically, the Cinnaholic FDD states that the Developer must furnish Cinnaholic with information relating to the construction of the Bakery and development of the site, including copies of all commitments and plans for construction and financing, the contact information for any lenders and contractors, and a copy of any construction or financing agreements. This suggests that the Developer is expected to handle the financial aspects of construction.
Furthermore, the FDD states that Cinnaholic is not obligated to loan money, guarantee leases, or provide financing to the Developer or any third party in respect to site selection or development of any Bakery. These activities and undertakings, financially and otherwise, are the exclusive responsibility of the Developer. Therefore, a prospective franchisee should clarify with Cinnaholic under what specific conditions, if any, a developer can incur debt on behalf of the franchisor.