In Michigan, are there any materials for which Cinnaholic is NOT required to compensate a franchisee upon non-renewal?
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, Michigan law stipulates specific conditions regarding franchise non-renewals and franchisee compensation. Cinnaholic is not required to compensate a franchisee for personalized materials that hold no value for Cinnaholic. Additionally, Cinnaholic is not obligated to provide compensation for inventory, supplies, equipment, fixtures, and furnishings that are not reasonably required for operating the Cinnaholic franchised business.
This provision protects Cinnaholic from having to repurchase items that are either unique to the franchisee or unnecessary for the standard operation of a Cinnaholic franchise. For a prospective franchisee, this means they may not be able to recoup the cost of certain items if the franchise is not renewed.
However, this exception regarding non-compensation applies only if two conditions are met: (1) the franchise term was less than 5 years, and (2) 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 did not receive at least 6 months' advance notice of Cinnaholic's intent not to renew the franchise. If both of these conditions are not met, the standard compensation rules would apply, potentially requiring Cinnaholic to repurchase a broader range of items.