What is the Cinnaholic franchisee's obligation regarding changes to their organizational structure or ownership interest as detailed in Exhibit E?
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 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:
| "A | transfer | of | this | stock | is | subject | to | the | terms | and | conditions | of | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CINNAHOLIC | FRANCHISING, | LLC | FRANCHISE | AGREEMENT | |||||||||
| dated the day of, 20" |
- 19.3. Death or Disability of Franchisee.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to the 2025 Cinnaholic Franchise Disclosure Document, a franchisee needs prior written consent from Cinnaholic for any transfer of the Bakery, the Franchised Site, the Agreement, or any rights or obligations under the agreement. This includes actions like subfranchising, selling, assigning, transferring, merging, conveying, or encumbering. This requirement extends to transfers occurring by operation of law or otherwise.
If the franchisee is a corporation, limited liability company, partnership, business trust, or similar entity, the equity holders (shareholders, members, partners, beneficiaries, investors) also need prior written consent from Cinnaholic to transfer their equity interests. This requirement extends further to the equity holders of those equity holders, meaning that transfers at multiple levels of ownership require Cinnaholic's approval.
Cinnaholic states that it will not unreasonably withhold consent to a transfer if the requirements of Section 19.4 of the agreement are met. Any transfer that violates these conditions will be considered void and without effect. If the franchisee or an equity holder has certificated equity interests, the certificates must have a specific legend endorsed on them.
Furthermore, if there are any changes to the Bound Parties, the franchisee must promptly notify Cinnaholic and ensure that the new Bound Party signs and delivers the Personal Covenants (Exhibit B) to Cinnaholic. These measures allow Cinnaholic to maintain control over who is operating its franchises and ensure that all parties involved are bound by the franchise agreement's terms and conditions.