What items are excluded from compensation if Cinnaholic does not renew a franchise agreement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
- (D) A PROVISION THAT PERMITS A FRANCHISOR TO REFUSE TO RENEW A FRANCHISE WITHOUT FAIRLY COMPENSATING THE FRANCHISEE BY REPURCHASE OR OTHER MEANS FOR THE FAIR MARKET VALUE, AT THE TIME OF EXPIRATION, OF THE FRANCHISEE'S INVENTORY, SUPPLIES, EQUIPMENT, FIXTURES, AND FURNISHINGS.
PERSONALIZED MATERIALS WHICH HAVE NO VALUE TO THE FRANCHISOR AND INVENTORY, SUPPLIES, EQUIPMENT, FIXTURES, AND FURNISHINGS NOT REASONABLY REQUIRED IN THE CONDUCT OF THE FRANCHISED BUSINESS ARE NOT SUBJECT TO COMPENSATION.
THIS SUBSECTION APPLIES ONLY IF: (i) THE TERM OF THE FRANCHISE IS LESS THAN 5 YEARS; AND (ii) THE FRANCHISEE IS PROHIBITED BY THE FRANCHISE OR OTHER AGREEMENT FROM CONTINUING TO CONDUCT SUBSTANTIALLY THE SAME BUSINESS UNDER ANOTHER TRADEMARK, SERVICE MARK, TRADE NAME, LOGOTYPE, ADVERTISING, OR OTHER COMMERCIAL SYMBOL IN THE SAME AREA SUBSEQUENT TO THE EXPIRATION OF THE FRANCHISE OR THE FRANCHISEE DOES NOT RECEIVE AT LEAST 6 MONTHS ADVANCE NOTICE OF FRANCHISOR'S INTENT NOT TO RENEW THE FRANCHISE.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 27–35)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, certain items are excluded from compensation if Cinnaholic chooses not to renew a franchise agreement within the state of Michigan. Specifically, personalized materials that hold no value for Cinnaholic are excluded.
Additionally, inventory, supplies, equipment, fixtures, and furnishings that are not reasonably required for conducting the franchised business are also excluded from compensation. This means that if a franchisee has items that are not essential to the operation of the Cinnaholic bakery, they will not be compensated for those items upon non-renewal.
However, these exclusions apply only under specific conditions: (1) if the franchise term is less than 5 years, and (2) if the franchisee is either prohibited from operating a similar business in the same area under a different brand after the franchise expires, OR the franchisee does not receive at least 6 months' advance notice of Cinnaholic's intent not to renew the franchise. These stipulations provide some protection to franchisees, ensuring they are fairly compensated unless the term was short and they had sufficient notice or freedom to continue in a similar business.