What happens if a Cinnaholic franchisee loses possession of the real property where the Bakery is located?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
- (xviii) Franchisee loses for any cause whatsoever right of possession as owner or lessee of the real property on which the Bakery is located. (However, if all or a substantial part of the real property on which the Bakery is located is taken by eminent domain proceedings so as to make the Bakery not in compliance with Franchisor's construction specifications or so as to make the Bakery inoperable for the purpose of carrying out the requirements of this Agreement, then Franchisor and Franchisee will agree upon a new location for the Bakery and Franchisee will construct and equip the new Bakery in accordance with the then current construction specifications of Franchisor within 180 days after the designation of such
location.
All of the terms of this Agreement not specifically modified herein shall apply to the construction, maintenance and operation of such new Bakery);
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a franchisee losing possession of the real property where the Bakery is located can trigger specific actions. If a Cinnaholic franchisee loses the right of possession to the real property, regardless of the cause, it constitutes a breach of the franchise agreement.
However, there is an exception: if a substantial part of the real property is taken by eminent domain, rendering the Bakery non-compliant with Cinnaholic's construction specifications or inoperable, Cinnaholic and the franchisee will collaborate to find a new location. The franchisee is then required to construct and equip a new Bakery at the agreed-upon location within 180 days, adhering to Cinnaholic's current construction specifications. All other terms of the original franchise agreement, unless specifically modified, will remain in effect for the new Bakery.
This clause protects Cinnaholic by ensuring franchisees maintain control of their location and adhere to legal and contractual obligations. For a prospective franchisee, this highlights the importance of securing a stable lease or property ownership. The eminent domain clause offers a contingency plan, but it also places the onus on the franchisee to reinvest and rebuild within a strict timeframe, underscoring the financial risks involved in unforeseen property-related issues.