What happens if a Cinnaholic franchise agreement is transferred in violation of Section 13.2?

The 2025 Cinnaholic Franchise Disclosure Document (FDD) specifies that making an unauthorized transfer of the Franchise Agreement constitutes a breach of contract. Specifically, section (xi) of Item 23 states that if the developer makes an unauthorized transfer of the agreement, the franchise, any bakery, or an ownership interest in the developer, it is grounds for default.

Item 23 further defines several other conditions that constitute default of the Cinnaholic franchise agreement. These include involuntary proceedings filed against the developer under bankruptcy, failure to pay amounts owed to Cinnaholic or its affiliates, failure to pay creditors, suppliers, lessors, or taxing authorities, failure to open bakeries according to the development schedule, failure to maintain the minimum number of bakeries, conviction of a felony, making a material misrepresentation to Cinnaholic, breach of the restrictive covenants in Section 14, failure to comply with laws applicable to the franchise, or voluntary or involuntary dissolution.

In addition to the above, Section 14.2 outlines that for one year following the date of a transfer by the developer, the developer and bound parties agree that they will not solicit employees of Cinnaholic or other Cinnaholic franchisees. Section 13.4 specifies that even with approval of a transfer, the marks cannot be used in advertising for any transfer prohibited by Sections 13.2 and 13.3.