How is 'Disability' defined in the Cinnaholic Market Development Agreement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon Developer's death or Disability (as such term is hereinafter defined), this Agreement or the ownership interest of any deceased or disabled shareholder, partner, member or other equity holder of the Developer or an Equity Holder must be Transferred to a party approved by Franchisor.
Any Transfer, including, without limitation, transfers by devise or inheritance or trust provisions, shall be subject to the same conditions for Transfers set forth in Section 13.4 below.
Franchisor shall not unreasonably withhold its consent to the Transfer of this Agreement or any ownership interest to the deceased or disabled Developer's or Equity Holder's spouse, heirs or members of his or her immediate family, provided all requirements of Section 13.4 have been complied with (except payment of the transfer fee, which shall not apply to such Transfers).
A "Disability" shall have occurred with respect to Developer if Developer, or, if Developer is a corporation, partnership or limited liability company, its controlling shareholder, partner, member or other equity holder, is unable to actively participate in its activities as Developer hereunder for any reason for a continuous period of six months.
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a 'Disability' is specifically defined within the context of the Market Development Agreement. It occurs if the Developer, or the controlling shareholder, partner, member, or other equity holder of the Developer (if the Developer is a corporation, partnership, or limited liability company), is unable to actively participate in the Cinnaholic business activities for a continuous period of six months.
This definition is important because the death or disability of the Developer triggers certain requirements regarding the transfer of the Development Agreement or ownership interests. Specifically, the agreement or the ownership interest of the deceased or disabled party must be transferred to a party approved by Cinnaholic. This transfer is subject to conditions similar to those for other transfers, although Cinnaholic agrees not to unreasonably withhold consent to a transfer to the deceased or disabled party's spouse, heirs, or immediate family members, provided all other requirements are met (except for the transfer fee).
For a prospective Cinnaholic franchisee, this means that planning for unforeseen circumstances such as disability is crucial. The franchisee should understand the implications for their business and ensure they have a succession plan in place that aligns with Cinnaholic's requirements for transfer of ownership. This might involve having a clear agreement with a partner or family member who can take over the business, or understanding the process for Cinnaholic to approve a new operator. The disability clause ensures that Cinnaholic maintains control over who operates its franchises, even in difficult situations, while also providing some flexibility for transfers to close family members.