Does the Michigan law require Cinnaholic to include a renewal provision in its franchise agreement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
INFORMATION FOR RESIDENTS OF THE STATE OF MICHIGAN
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU:
- (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.
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, Michigan law does not explicitly require Cinnaholic to include a renewal provision in its franchise agreement. However, Michigan law prohibits Cinnaholic from refusing to renew a franchise without fairly compensating the franchisee. This compensation must be for the fair market value of the franchisee's inventory, supplies, equipment, fixtures, and furnishings at the time of expiration.
This protection under Michigan law ensures that Cinnaholic franchisees are not unfairly penalized upon non-renewal. It mandates that Cinnaholic must provide fair compensation for the assets a franchisee has invested in to operate the business. This provision aims to protect franchisees' investments and prevent franchisors from exploiting the power imbalance at the end of the franchise term.
It is important to note that certain items are excluded from this compensation requirement. Cinnaholic is not obligated to compensate franchisees for personalized materials that have no value to the franchisor or for inventory, supplies, equipment, fixtures, and furnishings not reasonably required for the franchised business. Therefore, franchisees should maintain accurate records of their investments and ensure that all purchased items are necessary for the operation of the Cinnaholic franchise to be eligible for compensation upon non-renewal.