If a Cinnaholic franchisee receives a bona fide offer for their bakery, what must they do before transferring any interest?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
If during the term of this Agreement, Franchisee shall receive a bona fide offer from a prospective purchaser for any interest in Franchisee or the Bakery (whether by sale of assets, sale of equity interest, merger, consolidation or otherwise), it shall offer the same to Franchisor in writing at the same price and on the same terms or the monetary equivalent; which offer Franchisor may accept at any time within 30 days after receipt thereof. If the parties cannot agree on a reasonable monetary equivalent, an independent appraiser designated by Franchisor shall determine the monetary equivalent and the appraiser's determination will be final. If Franchisor declines, or does not within such 30 day period accept, such offer, then Franchisee may make such Transfer to such purchaser (provided Franchisor approves of such purchaser in accordance with Section 19.2 and subject to compliance with Section 19.4), but not at a lower price nor on more favorable terms than have been offered to Franchisor. If Franchisee fails to complete such Transfer within 90 days following the refusal or failure to act by Franchisor, then Franchisee may not complete such Transfer without first offering the same to Franchisor again as provided above. The parties recognize that the terms of this Section 23 do not apply to a sale and subsequent leaseback of the Franchised Site or any furnishings or equipment used thereon, or any other Transfer of the Franchised Site or the furnishings or equipment thereon in connection with any bona fide financing plan. In no event shall Franchisee offer any interest in this Agreement, or such premises or any interest therein, or any interest in the business conducted thereon, or in the equipment or furnishings located thereon, or in any interest of Franchisee or an Equity Holder for Transfer at public auction, nor at any time shall an offer be made to the public to Transfer the same, through the medium of advertisement, either in the newspapers or otherwise, without having first obtained the written consent of Franchisor to such advertisement or publication.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, if a franchisee receives a legitimate offer to purchase any interest in their Cinnaholic bakery, they must first offer the same terms to the franchisor in writing. This offer to Cinnaholic must include the price and all terms of the proposed sale, or the monetary equivalent of those terms. Cinnaholic then has 30 days to accept or decline the offer.
If Cinnaholic does not accept the offer within 30 days, the franchisee is then permitted to proceed with the transfer to the original prospective purchaser. However, this is contingent on Cinnaholic approving the purchaser according to Section 19.2 of the agreement and compliance with Section 19.4. The sale cannot be completed at a lower price or on more favorable terms than those initially offered to Cinnaholic.
If the transfer is not completed within 90 days following Cinnaholic's refusal or failure to act, the franchisee must re-offer the same terms to Cinnaholic before proceeding with any transfer. The FDD specifies that these right of first refusal terms do not apply to a sale and subsequent leaseback of the Franchised Site or any furnishings or equipment used thereon, or any other Transfer of the Franchised Site or the furnishings or equipment thereon in connection with any bona fide financing plan. Additionally, the franchisee cannot offer any interest in the Agreement, premises, business, equipment, or any interest of the Franchisee or an Equity Holder for Transfer at public auction, nor advertise the sale without Cinnaholic's written consent.