What is the Cinnaholic Developer's obligation regarding changes to its organizational structure or ownership interest?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Attached hereto as Exhibit D is a description of the legal organization of Developer (whether a corporation, limited, liability company, partnership or otherwise), the names and addresses of each person or entity owning a 10% or greater interest in Developer (the "Principal Owners") and the percentage of such interest owned by such person or entity. Developer agrees to notify Franchisor in writing whenever there is any change in the organizational structure or ownership interest of Developer as set forth on Exhibit D. Franchisor may require each Principal Owner to execute the Guaranty Agreement attached hereto as Exhibit E.
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the developer must notify Cinnaholic in writing whenever there is any change in the organizational structure or ownership interest of the developer as outlined in Exhibit D of the agreement. Exhibit D contains a description of the developer's legal organization, the names and addresses of individuals or entities owning 10% or greater interest in the developer, and the percentage of such interest owned.
This requirement ensures that Cinnaholic is kept informed about the ownership and structure of its franchisees' businesses. This allows Cinnaholic to maintain accurate records and assess any potential impacts of ownership changes on the franchise agreement.
Furthermore, Cinnaholic may require each principal owner to execute a Guaranty Agreement, as detailed in Exhibit E. This agreement likely holds the principal owners personally liable for the developer's obligations under the franchise agreement, providing Cinnaholic with an additional layer of security and accountability.