Does the Cinnaholic franchisor have the right to purchase, merge, acquire or affiliate with an existing competitive franchise network?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Developer agrees and affirms that Franchisor may sell itself, its assets, the Marks and/or the CINNAHOLIC® System to a third-party; may go public, may engage in private placement of some or all of its securities; may merge, acquire other corporations, or be acquired by another corporation; and/or may undertake a refinancing, recapitalization, leveraged buyout or other economic or financial restructuring. Developer further agrees and affirms that Franchisor has the right, now or in the future, to purchase, merge, acquire or affiliate with an existing competitive or noncompetitive franchise network, chain or any other business regardless of the location of that chain's or business' facilities, and to operate, franchise or license those businesses and/or facilities as CINNAHOLIC® Bakeries operating under the Marks or any other marks following Franchisor's purchase, merger, acquisition or affiliation, regardless of the location of these facilities, which Developer acknowledges may be proximate to any of its Bakeries. With regard to any of the above sales, assignments and dispositions, Developer expressly and specifically waives any claims, demands or damages arising from or related to the loss of Franchisor's name, the Marks (or any variation thereof) and the CINNAHOLIC® 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 Developer.
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to the 2025 Cinnaholic Franchise Disclosure Document, Cinnaholic Franchising, LLC retains significant rights regarding the brand's future and its relationship with other businesses. Specifically, Cinnaholic has the right to purchase, merge, acquire, or affiliate with existing franchise networks, even those that may be considered competitive. This clause also allows Cinnaholic to operate, franchise, or license these acquired businesses as Cinnaholic bakeries or under different brands.
This provision has important implications for prospective Cinnaholic franchisees. The agreement states that Cinnaholic can acquire a competing franchise and operate it under the Cinnaholic brand, potentially near existing Cinnaholic locations. The franchisee acknowledges that this could happen and waives any claims or damages related to changes in the brand, system, or association with Cinnaholic Franchising, LLC due to such actions.
This broad right gives Cinnaholic considerable flexibility in its growth strategy. However, it also introduces a level of uncertainty for franchisees, as the competitive landscape could change significantly if Cinnaholic acquires or merges with another chain. Franchisees should carefully consider this clause and its potential impact on their investment and market area. It is fairly common for franchise agreements to include clauses allowing for mergers and acquisitions, but the explicit right to affiliate with competitors is something a franchisee should fully understand before signing the agreement.