Can a Cinnaholic franchisee subfranchise without the franchisor's written consent?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
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 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 Cinnaholic's 2025 Franchise Disclosure Document, a franchisee is explicitly prohibited from subfranchising without obtaining prior express written consent from Cinnaholic. This restriction is outlined in the section regarding assignment by the franchisee. The FDD emphasizes that any attempt to subfranchise, sell, assign, transfer, merge, convey, or encumber the bakery, the franchised site, the agreement, or any associated rights or obligations without Cinnaholic's explicit written approval is considered a violation of the agreement.
This requirement for written consent extends beyond just the franchisee. If the franchisee is a corporation, limited liability company, partnership, or similar entity, the equity holders (shareholders, members, partners, etc.) are also barred from transferring their equity interests without Cinnaholic's prior written consent. Furthermore, if any equity holder is itself an entity (e.g., a corporation), the interests of its equity holders cannot be transferred without Cinnaholic's approval.
Cinnaholic states that it will not unreasonably withhold consent to a transfer, provided certain requirements are met. However, any transfer conducted in violation of these stipulations will be deemed void and without legal effect. To ensure compliance, if the franchisee or an equity holder has certificated equity interests, all stock or equity certificates must bear a conspicuous legend indicating the restriction on transfer.
This provision is typical in franchising, as franchisors want to maintain control over who operates units under their brand name. Prospective Cinnaholic franchisees should understand that they cannot transfer ownership or operational rights to a third party without Cinnaholic's approval, which ensures that the new operator meets Cinnaholic's standards and qualifications.