In Michigan, can Cinnaholic require arbitration or litigation to be conducted outside of the state?
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:
(A) A PROHIBITION ON THE RIGHT OF A FRANCHISEE TO JOIN AN ASSOCIATION OF FRANCHISEES.
(B) A REQUIREMENT THAT A FRANCHISEE ASSENT TO A RELEASE, ASSIGNMENT, NOVATION, WAIVER, OR ESTOPPEL WHICH DEPRIVES A FRANCHISEE OF RIGHTS AND PROTECTIONS PROVIDED IN THIS ACT.
THIS SHALL NOT PRECLUDE A FRANCHISEE, AFTER ENTERING INTO A FRANCHISE AGREEMENT, FROM SETTLING ANY AND ALL CLAIMS.
- (C) A PROVISION THAT PERMITS A FRANCHISOR TO TERMINATE A FRANCHISE BEFORE THE EXPIRATION OF ITS TERM EXCEPT FOR GOOD CAUSE.
GOOD CAUSE SHALL INCLUDE THE FAILURE OF THE FRANCHISEE TO COMPLY WITH ANY LAWFUL PROVISIONS OF THE FRANCHISE AGREEMENT AND TO CURE SUCH FAILURE AFTER BEING GIVEN WRITTEN NOTICE THEREOF AND A REASONABLE OPPORTUNITY, WHICH IN NO EVENT NEED BE MORE THAN 30 DAYS, TO CURE SUCH FAILURE.
- (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, certain provisions that might appear in the franchise documents are void and cannot be enforced against a franchisee in Michigan. These include any requirements that a franchisee assent to a release, assignment, novation, waiver, or estoppel which deprives them of rights and protections under the relevant Act. This does not prevent a franchisee from settling claims after entering into a franchise agreement.
Additionally, a provision that allows Cinnaholic to terminate a franchise before its term expires, except for good cause, is void. Good cause is defined as the franchisee's failure to comply with lawful provisions of the franchise agreement, provided they are given written notice and a reasonable opportunity (up to 30 days) to correct the failure. A provision that allows Cinnaholic to refuse renewal without fairly compensating the franchisee for the fair market value of their inventory, supplies, equipment, fixtures, and furnishings is also void. Compensation is not required for personalized materials or items not reasonably required for the franchised business.
While the FDD outlines several protections for franchisees in Michigan, it does not explicitly address whether Cinnaholic can require arbitration or litigation to be conducted outside of Michigan. A prospective franchisee should seek clarification from Cinnaholic regarding their policies on the venue for dispute resolution, to fully understand their rights and obligations under the franchise agreement.