Does the Cinnaholic franchisor have an obligation to advance the franchisee's share of the costs of arbitration?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISOR RESERVES THE RIGHT, BUT HAS NO OBLIGATION, TO ADVANCE FRANCHISEE'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 32.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to the 2025 Cinnaholic Franchise Disclosure Document, Cinnaholic does not have an obligation to advance the franchisee's share of arbitration costs. However, Cinnaholic reserves the right to do so.
Specifically, Cinnaholic retains the right, but is not required, to pay the franchisee's portion of arbitration expenses to facilitate the proceedings. This action does not relinquish Cinnaholic's entitlement to seek reimbursement of these advanced costs from the franchisee later, as outlined in Section 32 of the agreement.
This arrangement means that while Cinnaholic may assist a franchisee by covering their initial arbitration costs, the franchisee remains ultimately responsible for these expenses and may be required to repay Cinnaholic. It is important for prospective franchisees to understand this potential financial obligation and factor it into their assessment of the overall costs associated with the franchise.