Does the Cinnaholic franchise agreement specify what constitutes an 'unauthorized Transfer' of the agreement, the franchise, the Bakery, or an ownership interest?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall not subfranchise, sell, assign, transfer, merge, convey or encumber (each, a "Transfer"), the Bakery, the Franchised Site, this Agreement or any of its rights or obligations hereunder, or suffer or permit any such Transfer of the Bakery, the Franchised Site, this Agreement or its rights or obligations hereunder to occur by operation of law or otherwise without the prior express written consent of Franchisor.
In addition, if Franchisee is a corporation, limited liability company, partnership, business trust, or similar association or entity, the shareholders, members, partners, beneficiaries, investors or other equity holders, as the case may be, may not Transfer their equity interests in such corporation, limited liability company, partnership, business trust, or similar association or entity, without the prior written consent of Franchisor.
Furthermore, in the event that any shareholder, member, partner, investor or other equity holder of Franchisee (the "Equity Holder") is a corporation, limited liability company, partnership, business trust, or similar association or entity, the interests of the shareholders, members, partners, beneficiaries, investors or other equity holders, as the case may be, in such Equity Holder, may not be Transferred, without the prior written consent of Franchisor.
Franchisor will not unreasonably withhold consent to a Transfer provided the requirements of Section 19.4 have been satisfied.
Any Transfer in violation of this Section shall be void and of no force and effect.
In the event Franchisee or an Equity Holder is a corporation, limited liability company, partnership, business trust, or similar association or entity with certificated equity interests, all stock or equity certificates of Franchisee or Equity Holder, as the case may be, shall have conspicuously endorsed upon them a legend in substantially the following form:
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to the 2025 Cinnaholic Franchise Disclosure Document, the franchise agreement outlines specific conditions regarding the transfer of the agreement, the franchise, the bakery, or ownership interests. The agreement states that a franchisee cannot subfranchise, sell, assign, transfer, merge, convey, or encumber the bakery, the franchised site, the agreement itself, or any rights or obligations without prior express written consent from Cinnaholic. This restriction extends to transfers occurring by operation of law or otherwise.
For franchisees that are corporations, limited liability companies, partnerships, business trusts, or similar entities, the agreement stipulates that shareholders, members, partners, beneficiaries, investors, or other equity holders cannot transfer their equity interests without Cinnaholic's prior written consent. This requirement also applies if any equity holder is itself a corporation, LLC, partnership, or similar entity; the interests of its shareholders, members, partners, beneficiaries, investors, or other equity holders cannot be transferred without Cinnaholic's consent. Cinnaholic assures that it will not unreasonably withhold consent to a transfer if the requirements outlined in Section 19.4 of the agreement are met. Any transfer that violates these conditions will be considered void and without effect.
To ensure compliance, Cinnaholic requires that if a franchisee or an equity holder is a corporation, LLC, partnership, business trust, or similar entity with certificated equity interests, all stock or equity certificates must bear a conspicuous legend indicating that they are subject to transfer restrictions. This measure aims to provide clear notice of the transfer limitations to potential buyers or transferees of equity interests in the franchise. This level of detail is fairly typical in franchise agreements, as franchisors seek to maintain control over who joins their system and to ensure that new owners meet their standards.