Who was the officer of Cinnaholic that was also an officer of S&Q Shack and RBI during their respective bankruptcy filings?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
On March 19, 2009, a creditor, BV Retail, LLC ("BVR"), filed an involuntary petition against S&Q Shack for liquidation under Chapter 7 of the U.S. Bankruptcy Code. In re The S&Q Shack, LLC, No. 09-67151 (N.D. Georgia Atlanta Division 2009). Daryl Dollinger, an officer of ours, was an officer of S&Q Shack. BVR claimed that S&Q Shack owed BVR certain money in connection with a lease between S&Q Shack and BVR (the "Lease"). On April 13, 2009, S&Q Shack answered the petition and denied BVR allegations that (i) BVR is eligible to file the involuntary petition and (ii) S&Q Shack is not paying debts to BVR that are not subject to a bona fide dispute as to liability or amount. S&Q Shack also asserted in the answer that BVR lacked standing to file the involuntary petition because there are more than 12 creditors with claims that are not contingent or subject to bona fide dispute. By order dated August 27, 2010, S&Q Shack was placed into involuntary bankruptcy. S&Q Shack has cooperated with the U.S. Bankruptcy Trustee in the production of financial and other requested information.
On April 1, 2009, a creditor, BVR, also filed an involuntary petition against RBI for liquidation under Chapter 7 of the U.S. Bankruptcy Code. In re Raving Brands, Inc., No. 09-68410 (N.D. Georgia Atlanta Division 2009). Daryl Dollinger, an officer of ours, was an officer of RBI.
Source: Item 4 — BANKRUPTCY (FDD page 11)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Daryl Dollinger, an officer of Cinnaholic, also held officer positions at both The S&Q Shack, LLC and Raving Brands, Inc. (RBI) during the periods when those entities filed for bankruptcy. Specifically, S&Q Shack filed for liquidation under Chapter 7 of the U.S. Bankruptcy Code on March 19, 2009, and RBI followed suit on April 1, 2009, also seeking liquidation under Chapter 7.
This overlap in leadership raises potential concerns for prospective Cinnaholic franchisees. The bankruptcies of S&Q Shack and RBI while under the leadership of an officer currently associated with Cinnaholic could indicate past business challenges or management practices that franchisees should carefully consider. It is important to note that the FDD states that these bankruptcies occurred over a decade prior to the FDD's publication date.
While the FDD discloses the involvement of Cinnaholic's officer in these prior bankruptcies, it also mentions litigation related to these events. In 2012, the United States Bankruptcy Trustee initiated a lawsuit alleging fraudulent transfers and wrongful distributions connected to the sale of The S&Q Shack, LLC. This lawsuit named Daryl Dollinger, among other affiliates, officers, and directors, claiming that they caused or benefited from the distribution of proceeds from the S&Q Shack sale, leaving no assets to pay creditors. The suit also alleged that Martin Sprock authorized Daryl Dollinger to make wrongful distributions of the proceeds from the S&Q sale to RBI, Mr. Sprock, and other defendants. This litigation was settled in 2017.
Prospective franchisees should conduct thorough due diligence into the background and business history of key Cinnaholic personnel. Understanding the circumstances surrounding the prior bankruptcies and related litigation involving Cinnaholic's leadership is crucial for assessing the potential risks and opportunities associated with investing in a Cinnaholic franchise. This includes inquiring about the current roles and responsibilities of the individuals involved and the measures Cinnaholic has taken to prevent similar issues from arising in the future.