If I take out a loan to open my Cinnaholic franchise, will Cinnaholic guarantee the loan?

The 2025 Cinnaholic Franchise Disclosure Document does not state that Cinnaholic will guarantee a loan for a franchisee. However, the FDD does state that Cinnaholic may require each owner holding at least a 10% equity interest in the franchise to personally guarantee the franchisee's obligations to Cinnaholic under the Development Agreement and the Franchise Agreement. These guarantees would be in the form of a Guaranty Agreement attached as Exhibit E to the Development Agreement and Exhibit F to the Franchise Agreement, respectively.

This means that while Cinnaholic itself will not guarantee a franchisee's loan from a third-party lender, individual owners with a significant equity stake may be required to personally guarantee the franchise agreement obligations to Cinnaholic. This is a fairly standard practice in franchising, as it provides the franchisor with additional security and recourse in case of franchisee default.

A prospective Cinnaholic franchisee should carefully review Exhibit E and Exhibit F to fully understand the scope and terms of the Guaranty Agreements. They should also discuss with Cinnaholic the specific circumstances under which a personal guarantee would be required. It is important to note that this personal guarantee is separate from any loan a franchisee may take out to finance the business, and it only covers the franchisee's obligations to Cinnaholic, not to the lender.