What happens to the Cinnaholic franchise agreement upon the death or disability of the developer?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
tnership, 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. Notwithstanding anything to the contrary in this Agreement, Franchisor shall have the right to approve or disapprove a Transfer under this Section 13.2 in its sole discretion. Any Transfer in violation of this Section shall be void and of no force and effect.
- 13.3. Death or Disability of Developer. Upon Developer's death or Disability (as such term is hereinafter defined), this Agreement or the ownership interest of any deceased or disabled shareholder, partner, member or other equity holder of the Developer or an Equity Holder must be Transferred to a party approved by Franchisor. Any Transfer, including, without limitation, transfers by devise or inheritance or trust provisions, shall be subject to the same conditions for Transfers set forth in Section 13.4 below. Franchisor shall not unreasonably withhold its consent to the Transfer of this Agreement or any ownership interest to the deceased or disabled Developer's or Equity Holder's spouse, heirs or members of his or her immediate family, provided all requirements of Section 13.4 have been complied with (except payment of the transfer fee, which shall not apply to such Transfers). A "Disability" shall have occurred with respect to Developer if Developer, or, if Developer is a corporation, partnership or limited liability company, its controlling shareholder, partner, member or other equity holder, is unable to actively participate in its activities as Developer hereunder for any reason for a continuous period of six months. As used in this Section 13.3, "Developer" may include a disabled or deceased controlling shareholder, partner or member where the context so requires.
- 13.4. Approval of Assignment. Franchisor's approval of any Transfer is, in all cases, contingent upon the following:
- (i) the purchaser and/or the controlling persons of the purchaser having a satisfactory credit rating, being of good moral character, having business qualifications satisfactory to Franchisor, and being willing to enter into an agreement in writing to assume and perform all of Developer's duties and obligations hereunder and/or enter into a new Market Development Agreement for the Area of Responsibility, if so requested by Franchisor, and agreeing to enter into any and all agreements with Franchisor that are being required of all new market developers, including a guaranty agreement and any other agreement which may require payment of different or increased fees from those paid under this Agreement;
- (ii) the terms and conditions of the proposed transfer (including, without limitation, the purchase price) being satisfactory to Franchisor;
- (iii) all monetary obligations (whether hereunder or not) of Developer to Franchisor or Franchisor's affiliates or subsidiaries being paid in full;
- (iv) Developer not being in default hereunder or any other agreement between Developer and Franchisor, including any Franchise Agreement;
- (v) Developer and its owners executing a general release of any and all claims against Franchisor and its affiliates, subsidiaries, members, managers, officers, directo
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, in the event of the developer's death or disability, the agreement or ownership interest must be transferred to a party approved by Cinnaholic. This condition also applies to the death or disability of any shareholder, partner, member, or other equity holder of the developer. The term 'Developer' can also refer to a disabled or deceased controlling shareholder, partner, or member.
The transfer, including those by devise, inheritance, or trust provisions, is subject to specific conditions. Cinnaholic will not unreasonably withhold consent to transfer the agreement or ownership interest to the deceased or disabled party's spouse, heirs, or immediate family members, provided all other requirements are met, except for the transfer fee.
A 'Disability' is defined as the inability of the developer, or its controlling shareholder, partner, member, or other equity holder, to actively participate in the activities as a Cinnaholic developer for a continuous period of six months.
The approval of any transfer is contingent upon several factors, including the purchaser's satisfactory credit rating, good moral character, and business qualifications. The purchaser must also agree to assume all of the developer's duties and obligations, and potentially enter into a new Market Development Agreement. All monetary obligations to Cinnaholic must be paid, and the developer must not be in default of any agreements. Additionally, the developer must execute a general release of claims against Cinnaholic, offer to sell the interest to Cinnaholic first, and ensure the trademarks are not used in prohibited advertising. A transfer fee of $5,000 plus reimbursement for legal, training, and other expenses is also required, although this fee is waived for transfers to the deceased or disabled party's spouse, heirs, or immediate family.