What happens if a Cinnaholic franchisee attempts a transfer in violation of the agreement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
C® 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 Franchisee.
- 19.2. Assignment by Franchisee. Franchisee shall not subfranchise, sell, assign, transfer, merge, convey or encumber (each, a "Transfer"), the Bakery, the Franchised Site, this Agreement or any of its rights or obligations hereunder, or suffer or permit any such Transfer of the Bakery, the Franchised Site, this Agreement or its rights or obligations hereunder to occur by operation of law or otherwise without the prior express written consent of Franchisor. In addition, if Franchisee is a corporation, limited liability company, partnership, business trust, or similar association or entity, the shareholders, members, partners, beneficiaries, investors or other equity holders, as the case may be, may not Transfer their equity interests in such corporation, limited liability company, partnership, business trust, or similar association or entity, without the prior written consent of Franchisor. Furthermore, in the event that any shareholder, member, partner, investor or other equity holder of Franchisee (the "Equity Holder") is a corporation, limited liability company, partnership, 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. Franchisor will not unreasonably withhold consent to a Transfer provided the requirements of Section 19.4 have been satisfied.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to the 2025 Cinnaholic Franchise Disclosure Document, a franchisee is not allowed to subfranchise, sell, assign, transfer, merge, convey, or encumber their bakery, franchised site, the agreement itself, or any rights or obligations without Cinnaholic's prior express written consent. This restriction extends to transfers occurring by operation of law or otherwise. If the franchisee is a corporation, LLC, partnership, or similar entity, the equity holders also cannot transfer their interests without Cinnaholic's approval. This requirement extends to the equity holders of equity holders. Cinnaholic states that it will not unreasonably withhold consent to a transfer if the requirements of Section 19.4 have been met.
Any transfer attempted by a Cinnaholic franchisee that violates these conditions will be considered void and of no force and effect. This means the transfer will not be recognized, and the franchisee will still be bound by the original agreement.
Furthermore, making an unauthorized transfer of the Franchise Agreement, the franchise, the Bakery, or an ownership interest in Franchisee constitutes a cause for termination of the franchise agreement.
This provision protects Cinnaholic by ensuring that the brand maintains control over who operates its franchises and upholds brand standards. A prospective franchisee should carefully review Section 19.4 to understand the requirements for obtaining Cinnaholic's consent to a transfer.