Is a Cinnaholic franchisee's failure to maintain possession of the Bakery premises considered a non-curable default?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary | |
|---|---|---|---|
| a. | Length of the franchise term | Section 2.1 | 10 years |
| b. | Renewal or extension of the term | Section 2.2 | If you meet the requirements, you can renew for one additional consecutive 10 year term; after that you will have no right to renew the Franchise Agreement. |
| c. | Requirements for franchisee to renew or extend | Section 2.2 | You must: provide written notice of election to renew; not be in default of the Franchise Agreement or any other agreement relating to the Bakery; sign the then-current form of Franchise Agreement; pay a renewal fee; refurbish the Bakery, if required; complete any required retraining program; sign the current form of general release in Exhibit J to this Disclosure Document; and maintain ownership or leasehold interest in the Bakery location or secure a suitable alternative. Terms of the then-current form of Franchise Agreement may differ materially from any and all of those contained in the Franchise Agreement attached to this Disclosure Document. |
| d. | Termination by franchisee | Section 21.1 | You can terminate only if we fail to cure a default under the Franchise Agreement within 90 days (or 150 days in some instances) after you give us written notice of termination. |
| e. | Termination by franchisor without cause | Not Applicable | Not Applicable. Termination of the Development Agreement does not allow for the termination of any then in force Franchise Agreement. Termination of any Franchise Agreement does not allow for termination of the Development Agreement, so long as Franchisee is otherwise in compliance with its development schedule. |
| f. | Termination by franchisor with cause | Sections 21.2 and 21.3 | We can terminate only if you default or if certain events (described in (g) and (h) below) occur. In some instances, you will have an opportunity to cure the default. Termination of the Development Agreement does not allow for the termination of any then in force Franchise Agreement. Termination of any Franchise Agreement does not allow for termination of the Development Agreement, so long as Franchisee is otherwise in compliance with its development schedule. |
| g. "Cause" defined – curable defaults | Section 21.3 | Failure to comply with our standards and procedures or any term of the Franchise Agreement not covered in "h" below, including: failure to submit required reports; failure to relocate; failure to comply with any of the terms and conditions of any other agreement entered into by you in connection with your Bakery; failure to maintain required insurance; and failure to restore Bakery to full operation if it is rendered inoperable by casualty. You have 30 days (or 60 days in some instances) after we give you written notice to cure the default. Termination of the Development Agreement does not allow for the termination of any then in force Franchise Agreement. Termination of any Franchise Agreement does not allow for termination of the Development Agreement, so long as Franchisee is otherwise in compliance with its development schedule. | |
| h. "Cause" defined – non curable defaults | Section 21.2 | Insolvency; bankruptcy; liquidation; reorganization; general assignment for benefit of creditors; failure to pay us or any creditor, supplier or lessor of the Bakery any sums due after written notification; conviction of a felony or crime involving moral turpitude; operation of the Bakery as a safety hazard; making of material misrepresentations; unauthorized transfer; failure to comply with non-competition and non-solicitation provisions; unauthorized use of any Mark or disclosure of confidential information; failure to comply with any applicable law; unauthorized seizures; failure to maintain possession of the Bakery premises; knowingly maintaining false books or records; denying us access to your books or records; understatement of fees by more than 5%; receipt of three default notices within a 12 month period; or dissolution. Termination of the Development Agreement does not allow for the termination of any then in force Franchise Agreement. Termination of any Franchise Agreement does not allow for termination of the Development Agreement, so long as Franchisee is otherwise in compliance with its development schedule. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 42–50)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a franchisee's failure to maintain possession of the bakery premises is considered a non-curable default. This means that if a Cinnaholic franchisee loses possession of their bakery location, Cinnaholic has grounds to terminate the franchise agreement immediately without providing an opportunity for the franchisee to correct the issue.
This type of default is considered severe due to its potential impact on the Cinnaholic business. Losing the physical location can halt operations, disrupt the brand's presence, and negatively affect revenue. Because the location is critical to the business, Cinnaholic likely views the inability to maintain possession as a critical failure that cannot be easily remedied.
For a prospective Cinnaholic franchisee, this underscores the importance of securing and maintaining a stable lease or ownership of the bakery premises. Franchisees should carefully review their lease agreements and ensure they have adequate safeguards in place to prevent losing possession of the property. This might include negotiating favorable lease terms, maintaining strong relationships with landlords, and having contingency plans in case of unforeseen circumstances that could jeopardize their control of the location.
Non-curable defaults are relatively common in franchising, especially for issues that strike at the core of the business operation or brand integrity. However, franchisees should be aware of all such clauses in their franchise agreement and understand the potential consequences of each.