If an involuntary bankruptcy proceeding is filed against a Cinnaholic franchisee, how long does the franchisee have to dismiss the proceeding to avoid termination?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor may immediately terminate this Agreement upon written notice to Franchisee, without opportunity to cure, if:
- (iv) Franchisee has an involuntary proceeding filed against it under any bankruptcy, reorganization, or similar law and such proceeding is not dismissed within 60 days thereafter;
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, if an involuntary bankruptcy proceeding is filed against a franchisee, Cinnaholic has the right to terminate the franchise agreement immediately if the franchisee does not dismiss the proceeding within a specific timeframe.
Specifically, Cinnaholic can terminate the agreement without allowing the franchisee an opportunity to remedy the situation if an involuntary proceeding is filed against the franchisee under any bankruptcy, reorganization, or similar law. However, the franchisee has 60 days to dismiss the proceeding. If the franchisee fails to dismiss the involuntary proceeding within this 60-day period, Cinnaholic can immediately terminate the franchise agreement.
This clause protects Cinnaholic from potential financial and reputational damage that could arise from a franchisee's bankruptcy. It also motivates the franchisee to resolve any involuntary bankruptcy filings promptly to maintain their franchise rights. Prospective franchisees should be aware of this provision and understand the importance of maintaining financial stability to avoid such situations.