If I lease equipment for my Cinnaholic franchise, will Cinnaholic guarantee the lease?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
If you lease the site for your Bakery, you must collaterally assign your lease to us by signing the form of Collateral Assignment of Lease attached as an exhibit to the Development Agreement and have your landlord sign the Collateral Assignment of Lease consenting to the assignment. Under the Collateral Assignment of Lease, we will be granted the right, but not the obligation, to take possession of your Bakery's premises if your franchise agreement is terminated.
Source: Item 10 — FINANCING (FDD page 27)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Cinnaholic does not guarantee a franchisee's lease for equipment. However, if a franchisee leases the site for their Cinnaholic bakery, they must collaterally assign the lease to Cinnaholic by signing the Collateral Assignment of Lease form. The landlord must also sign this form, consenting to the assignment.
Under this Collateral Assignment of Lease, Cinnaholic gains the right, but not the obligation, to take possession of the bakery premises if the franchise agreement is terminated. This means that while Cinnaholic will not guarantee any lease agreements, they do protect their interests by having the option to take over the premises if the franchisee defaults on the agreement.
Prospective franchisees should be aware of this requirement and factor it into their leasing negotiations. It is also important to note that Cinnaholic must approve the site for the bakery, ensuring it meets their current site criteria. This approval process and the collateral assignment of lease are standard practices in franchising, designed to protect the franchisor's brand and investment in the event of franchisee default.