Does the Cinnaholic franchisee need written consent from the franchisor to transfer the franchised site?
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.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a franchisee is required to obtain prior express written consent from Cinnaholic to transfer the franchised site. This requirement is explicitly stated in the section regarding assignment by the franchisee. The FDD specifies that the franchisee cannot sell, assign, transfer, or convey the franchised site without this consent.
This provision protects Cinnaholic by ensuring that the franchisee operating at a specific location meets their standards and is a suitable business operator. It also allows Cinnaholic to maintain control over the locations at which their franchises operate. This is a fairly standard clause in most franchise agreements.
Furthermore, the FDD clarifies that if the franchisee is a corporation, limited liability company, partnership, or similar entity, the equity holders also cannot transfer their equity interests without prior written consent from Cinnaholic. This extends the control Cinnaholic has over the franchise beyond just the franchisee themselves, to the ownership of the franchisee's business entity. Any transfer without this consent is considered void and without effect.
Cinnaholic also states that it will not unreasonably withhold consent to a transfer, provided that the requirements of Section 19.4 of the franchise agreement have been satisfied. This suggests that there are specific conditions under which a transfer request would be evaluated, offering some predictability for franchisees looking to transfer their site. However, the specifics of Section 19.4 are not detailed in the provided excerpts.