Is a Cinnaholic franchise transfer permitted if the franchisee is in default of any agreement with Cinnaholic?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
C® System and/or the loss of association with or identification of CINNAHOLIC FRANCHISING, LLC, under this Agreement. If Franchisor assigns its rights in this Agreement, nothing in this Agreement shall be deemed to require Franchisor to remain in the CINNAHOLIC business or to offer or sell any products or services to Franchisee.
- 19.2. Assignment by Franchisee. 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
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a franchisee is generally not allowed to transfer the franchise without Cinnaholic's prior written consent. Cinnaholic states that it will not unreasonably withhold consent to a transfer if the requirements of Section 19.4 of the franchise agreement are met.
However, the FDD does not explicitly state whether a transfer is permissible if the franchisee is in default of any agreement with Cinnaholic. It is important to note that the agreement specifies several actions that constitute a default, such as failing to pay fines within ten days of written notice or making an unauthorized transfer of the agreement.
Since the FDD does not directly address the scenario of a franchisee in default seeking a transfer, prospective franchisees should seek clarification from Cinnaholic regarding their policy on transfers when a franchisee is in default. Understanding Cinnaholic's position on this matter is crucial for assessing the risks and potential limitations on the franchisee's ability to exit the business if they encounter financial or operational difficulties.