Must all monetary obligations of the Cinnaholic Developer be satisfied before a transfer is approved?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
ch shall not apply to such Transfers). A "Disability" shall have occurred with respect to Developer if Developer, or, if Developer is a corporation, partnership or limited liability company, its controlling shareholder, partner, member or other equity holder, is unable to actively participate in its activities as Developer hereunder for any reason for a continuous period of six months. As used in this Section 13.3, "Developer" may include a disabled or deceased controlling shareholder, partner or member where the context so requires.
- 13.4. Approval of Assignment. Franchisor's approval of any Transfer is, in all cases, contingent upon the following:
- (i) the purchaser and/or the controlling persons of the purchaser having a satisfactory credit rating, being of good moral character, having business qualifications satisfactory to Franchisor, and being willing to enter into an agreement in writing to assume and perform all of Developer's duties and obligations hereunder and/or enter into a new Market Development Agreement for the Area of Responsibility, if so requested by Franchisor, and agreeing to enter into any and all agreements with Franchisor that are being required of all new market developers, including a guaranty agreement and any other agreement which may require payment of different or increased fees from those paid under this Agreement;
- (ii) the terms and conditions of the proposed transfer (including, without limitation, the purchase price) being satisfactory to Franchisor;
- (iii) all monetary obligations (whether hereunder or not) of Developer to Franchisor or Franchisor's affiliates or subsidiaries being paid in full;
- (iv) Developer not being in default hereunder or any other agreement between Developer and Franchisor, including any Franchise Agreement;
- (v) Developer and its owners executing a general release of any and all claims against Franchisor and its affiliates, subsidiaries, members, managers, officers, directo
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a Developer (franchisee) seeking to transfer their agreement must fulfill all outstanding monetary obligations to Cinnaholic or its affiliates and subsidiaries before the transfer can be approved. This requirement ensures that Cinnaholic receives all due payments before a new party assumes the responsibilities and rights of the franchise.
In addition to settling all monetary obligations, Cinnaholic's approval of a transfer is contingent upon several other factors. The purchaser must have a satisfactory credit rating, be of good moral character, and possess business qualifications acceptable to Cinnaholic. The purchaser must also agree in writing to assume all of the Developer's duties and obligations or enter into a new Market Development Agreement if requested by Cinnaholic. Furthermore, the terms and conditions of the proposed transfer, including the purchase price, must be satisfactory to Cinnaholic.
The Developer must not be in default of any agreement with Cinnaholic, including any Franchise Agreement. The Developer and its owners are also required to execute a general release of any and all claims against Cinnaholic and its affiliates. A transfer fee of $5,000 is payable to Cinnaholic, along with reimbursement for all legal, training, and other expenses incurred by Cinnaholic in connection with the transfer. The Developer must first offer to sell the interest to Cinnaholic, and Cinnaholic must decline the offer. Finally, the Marks cannot be used in any advertising for any transfer prohibited by Sections 13.2 and 13.3.
These conditions collectively ensure that Cinnaholic maintains control over who becomes a franchisee and that the financial and legal aspects of the transfer are properly handled. Prospective franchisees should be aware of these requirements and factor them into their plans if they anticipate transferring their franchise in the future.