Does the Cinnaholic franchisor have an obligation to advance the developer's share of arbitration costs?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISOR RESERVES THE RIGHT, BUT HAS NO OBLIGATION, TO ADVANCE DEVELOPER'S SHARE OF THE COSTS OF ANY ARBITRATION PROCEEDING IN ORDER FOR SUCH ARBITRATION PROCEEDINGS TO TAKE PLACE AND BY DOING SO WILL NOT BE DEEMED TO HAVE WAIVED OR RELINQUISHED FRANCHISOR'S RIGHT TO SEEK THE RECOVERY OF THOSE COSTS IN ACCORDANCE WITH SECTION 22.
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the franchisor is not obligated to advance the developer's share of arbitration costs. However, Cinnaholic reserves the right to do so. If Cinnaholic chooses to advance these costs, it does not relinquish its right to seek recovery of those costs from the developer later, in accordance with Section 22 of the agreement.
This means that while Cinnaholic may, at its discretion, provide financial assistance to cover the developer's arbitration expenses initially, this is not a guaranteed benefit. The developer should be prepared to cover these costs independently.
It is important for a prospective Cinnaholic franchisee to understand that even if the franchisor advances these costs, they retain the right to seek reimbursement. Therefore, franchisees should factor potential arbitration costs into their financial planning and be aware of the conditions under which they might be required to repay any advanced funds.