If a Cinnaholic Developer files for bankruptcy, can the Franchisor terminate the agreement immediately?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor may immediately terminate this Agreement upon written notice to Developer, without opportunity to cure, if:
- (i) Developer files a petition under any bankruptcy or reorganization law, becomes insolvent, or has a trustee or receiver appointed by a court of competent jurisdiction for all or any part of its property;
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic can terminate the Developer Agreement immediately if the Developer files for bankruptcy. Specifically, Cinnaholic can terminate the agreement upon written notice without an opportunity to cure the breach if the Developer files a petition under any bankruptcy or reorganization law.
This clause protects Cinnaholic from the risks associated with a Developer's financial instability. Bankruptcy can disrupt the Developer's ability to fulfill their obligations under the agreement, potentially harming the Cinnaholic brand and system. This immediate termination clause allows Cinnaholic to quickly sever ties with a bankrupt Developer and find a more stable partner.
It is important to note that this termination right is not dependent on the bankruptcy proceeding's outcome. The mere filing of a bankruptcy petition is sufficient grounds for Cinnaholic to terminate the agreement. This is a standard clause in many franchise agreements, as it allows the franchisor to protect its brand and network from the negative impacts of a franchisee's financial distress.