In Maryland, what financial assurance is required based on the Cinnaholic franchisor's financial condition?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Based upon the franchisor's financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until the franchisor completes its pre-opening obligations under the franchise agreement. In addition, all development fees and initial payments by area developers shall be deferred until the first franchise under the development agreement opens
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 27–35)
What This Means (2025 FDD)
According to the 2025 Cinnaholic Franchise Disclosure Document, the Maryland Securities Commissioner requires financial assurance due to Cinnaholic's financial condition. This assurance mandates that all initial fees and payments owed by franchisees in Maryland are deferred. This deferral remains in effect until Cinnaholic fulfills its pre-opening obligations as outlined in the franchise agreement.
This condition also extends to area developers in Maryland. All development fees and initial payments from area developers are also deferred. These payments are not due until the first Cinnaholic franchise under the development agreement is opened.
For a prospective franchisee in Maryland, this addendum offers a degree of financial protection. It ensures that franchisees are not required to pay initial fees until Cinnaholic has met its obligations to support the opening of the franchise. This could reduce the franchisee's risk, as they are not investing heavily upfront before Cinnaholic has delivered on its promises of support and assistance.