In the event of death or disability, must the transfer of a Cinnaholic franchise be approved by the franchisor?
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.
As used in this Section 13.3, "Developer" may include a disabled or deceased controlling shareholder, partner or member where the context so requires.
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, in the event of the death or disability of a Cinnaholic developer, the franchise agreement or ownership interest must be transferred to a party approved by Cinnaholic. This applies to the developer or any shareholder, partner, member, or equity holder of the developer.
This transfer is subject to the same conditions as other transfers, but with a notable exception: the transfer fee is waived for transfers to the deceased or disabled developer's spouse, heirs, or immediate family members, provided all other requirements are met. Cinnaholic agrees not to unreasonably withhold consent for such transfers to these immediate relatives.
A 'Disability' is defined as the inability of the developer, or the controlling shareholder, partner, member, or equity holder, to actively participate in the Cinnaholic business for a continuous period of six months. This provision ensures that Cinnaholic maintains control over who operates its franchises, even in unforeseen circumstances, while also providing some flexibility for the franchisee's family.
For a prospective Cinnaholic franchisee, this means that planning for succession is crucial. While Cinnaholic will likely approve a transfer to a qualified family member without the transfer fee, it's important to understand the conditions and ensure that potential successors meet Cinnaholic's criteria. The franchisee should discuss potential scenarios with Cinnaholic to understand their options and ensure a smooth transition if needed.