Does Cinnaholic offer any guarantees for franchisee obligations?

According to the 2025 Cinnaholic FDD, Cinnaholic requires owners holding at least a 10% equity interest to personally guarantee the franchisee's obligations under the Development Agreement and the Franchise Agreement. These guarantees are formalized through a Guaranty Agreement, included as Exhibit E to the Development Agreement and Exhibit F to the Franchise Agreement. This means that these owners are personally liable for the financial and operational commitments the franchisee makes to Cinnaholic.

In certain states like Maryland, Virginia, and Illinois, Cinnaholic provides a form of financial assurance related to the initial franchise fee. In Maryland, the Maryland Securities Commissioner requires a financial assurance, so all initial fees and payments are deferred until Cinnaholic completes its pre-opening obligations. Similarly, in Virginia, the Virginia State Corporation Commission's Division of Securities and Retail Franchising requires deferral of initial fees until Cinnaholic fulfills its pre-opening duties. Illinois also mandates deferral of initial franchise and development fees until Cinnaholic meets its initial obligations and the franchisee commences business, a requirement imposed by the Illinois Attorney General due to Cinnaholic's financial condition.

These state-specific addenda also include provisions that protect franchisees by preventing them from waiving claims under state franchise laws or disclaiming reliance on statements made by Cinnaholic. These protections ensure that franchisees in these states retain their legal rights and are not bound by agreements that could compromise their ability to pursue claims against Cinnaholic. These measures provide a degree of security for franchisees by ensuring Cinnaholic fulfills its initial obligations before receiving payment and by safeguarding their legal rights under state laws.