In the event of termination of the Cinnaholic franchise agreement, can the franchisee prevent the transfer or termination of telephone numbers and listings?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
2. TRANSFER; APPOINTMENT
2.1 Interest in Telephone Numbers and Listings. Franchisee has, or will acquire during the term of the Franchise Agreement, certain right, title, and interest in and to those certain telephone numbers and regular, classified, yellow-page, and other telephone directory listings (collectively, the "Telephone Numbers and Listings") related to the Bakery or the Marks (all of which right, title, and interest is referred to herein as Franchisee's "Interest").
2.2 Transfer. On Termination of the Franchise Agreement, if Franchisor directs Franchisee to do so, Franchisee will immediately direct all telephone companies, telephone directory publishers, and telephone directory listing agencies (collectively, the "Telephone Companies") with which Franchisee has Telephone Numbers and Listings: (i) to transfer all Franchisee's Interest in such Telephone Numbers and Listings to Franchisor; and (ii) to execute such documents and take such actions as may be necessary to effectuate such transfer. In the event Franchisor does not desire to accept any or all such Telephone Numbers and Listings, Franchisee will immediately direct the Telephone Companies to terminate such Telephone Numbers and Listings or will take such other actions with respect to the Telephone Numbers and Listings as Franchisor directs.
2.3 Appointment; Power of Attorney. Franchisee hereby constitutes and appoints Franchisor and any officer or agent of Franchisor, for Franchisor's benefit under the Franchise Agreement and this Telephone Listing Agreement or otherwise, with full power of substitution, as Franchisee's true and lawful attorney-in-fact with full power and authority in Franchisee's place and stead, and in Franchisee's name or the name of any affiliated person or affiliated company of Franchisee, on Termination of the Franchise Agreement, to take any and all appropriate action and to execute and deliver any and all documents that may be necessary or desirable to accomplish the purposes of this Telephone Listing Agreement. Franchisee further agrees that this appointment constitutes a power coupled with an interest and is irrevocable until Franchisee has satisfied all of its obligations under the Franchise Agreement and any and all other agreements to which Franchisee and any of its affiliates on the one hand, and Franchisor and any of its affiliates on the other, are parties, including, without limitation, this Telephone Listing Agreement. Without limiting the generality of the foregoing, Franchisee hereby grants to Franchisor the power and right to do the following:
(i) Direct the Telephone Companies to transfer all Franchisee's Interest in and to the Telephone Numbers and Listings to Franchisor;
(ii) Direct the Telephone Companies to terminate any or all of the Telephone Numbers and Listings; and
(iii) Execute the Telephone Companies' standard assignment forms or other documents in order to affect such transfer or termination of Franchisee's Interest.
2.4 Certification of Termination. Franchisee hereby directs the Telephone Companies that they shall accept, as conclusive proof of Termination of the Franchise Agreement, Franchisor's written statement, signed by an officer or agent of Franchisor, that the Franchise Agreement has terminated.
2.5 Cessation of Obligations. After the Telephone Companies have duly transferred all Franchisee's Interest in such Telephone Numbers and Listings to Franchisor, as between Franchisee and Franchisor, Franchisee will have no further Interest in, or obligations under, such Telephone Numbers and Listings. Notwithstanding the foregoing, Franchisee will remain liable to each and all of the Telephone Companies for the sums Franchisee is obligated to pay such Telephone Companies for obligations Franchisee incurred before the date Franchisor duly accepted the transfer of such Interest, or for any other obligations not subject to the Franchise Agreement or this Telephone Listing Agreement.
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the franchisee's ability to prevent the transfer or termination of telephone numbers and listings upon termination of the franchise agreement is limited. The Telephone Listing Agreement outlines that upon termination, Cinnaholic has the authority to direct the telephone companies to either transfer the franchisee's interest in the telephone numbers and listings to Cinnaholic or to terminate them.
Specifically, the franchisee agrees to direct the telephone companies to transfer all rights to Cinnaholic or terminate the listings, and to execute any necessary documents to facilitate this. Cinnaholic is also granted power of attorney to act on behalf of the franchisee to ensure the transfer or termination is completed. This appointment as power of attorney is irrevocable until the franchisee has fulfilled all obligations under the Franchise Agreement and related agreements.
Furthermore, Cinnaholic is not obligated to accept the transfer of the telephone numbers and listings, and the powers conferred to Cinnaholic under the Telephone Listing Agreement are solely to protect Cinnaholic's interests. The Telephone Listing Agreement survives the termination of the Franchise Agreement, meaning these obligations continue even after the franchise relationship ends. The franchisee remains responsible for costs incurred before the transfer of interest but releases the telephone companies from any claims related to the agreement.
In practical terms, this means that a franchisee essentially relinquishes control over the business's phone numbers and listings upon termination, and must comply with Cinnaholic's directives regarding their transfer or termination. This is a significant consideration for prospective franchisees, as these telephone contacts are often crucial for maintaining customer relationships and goodwill. Franchisees should be aware that they cannot prevent Cinnaholic from taking control of these assets upon termination of the agreement.