factual

What are the 'Opening Requirements' for a Cinnaholic franchise?

Cinnaholic Franchise · 2025 FDD

Answer from 2025 FDD Document

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[Signatures Appear on Following Page] Agreed: GUARANTORS: CINNAHOLIC FRANCHISING, LLC (SEAL) Address: Its: Social Security No.: (SEAL) Address: Social Security No.: (SEAL) Address: Social Security No.: (SEAL) Address: Social Security No.:

Exhibit G

State Specific Addenda

(See Attached) (California)

The following Addendum modifies and supersedes the Cinnaholic Franchising, LLC Franchise Agreement (the "Agreement") with respect to CINNAHOLIC® franchises offered or sold to either a resident of the State of California or a non-resident who will be operating a CINNAHOLIC® franchise in the State of California pursuant to the California Franchise Investment Law §§ 31000 through 31516, and the California Franchise Relations Act, California Business and Professions Code §§ 20000 through 20043, as follows:

  1. The first sentence of Section 4 of the Franchise Agreement is deleted in its entirety and replaced with the following:

The Department has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations. The Commissioner has imposed a fee deferral condition, which requires that we defer the collection of all initial fees from California franchisees until we have completed all of our pre-opening obligations and you are open for business. The payment of the development and initial fees attributable to a specific unit in your development schedule is deferred until that unit is open.

    1. If any of the provisions of the Agreement concerning termination and non-renewal of a franchise are inconsistent with either the California Franchise Relations Act or with the federal bankruptcy law (11 U.S.C. §101, et seq.) (concerning termination of the Agreement on certain bankruptcy-related events), then such laws will apply.
    1. The Agreement requires that it be governed by Georgia law. This requirement may be unenforceable under California law.
    1. Franchisee must sign a general release if Franchisee renews or transfers its franchise. California Corporations Code 31512 voids a waiver of Franchisee's rights under the Franchise Investment Law (California Corporations Code 31000 through 31516). Business and Professions Code 20010 voids a waiver of Franchisee's rights under the Franchise Relations Act (Business and Professions Code 20000 through 20043).
    1. The Agreement contains a covenant not to compete, as well as a no-poach/non-solicitation covenant, which extend beyond the termination of the franchise. These provisions may not be enforceable under California law.

6. Section 31512.1- Franchise Agreement Provisions Void as Contrary to Public Policy:

Any provision of a franchise agreement, franchise disclosure document, acknowledgement, questionnaire, or other writing, including any exhibit thereto, disclaiming or denying any of the following shall be deemed contrary to public policy and shall be void and unenforceable:

  • (a) Representations made by the franchisor or its personnel or agents to a prospective franchisee.
  • (b) Reliance by a franchisee on any representations made by the franchisor or its personnel or agents.
  • (c) Reliance by a franchisee on the franchise disclosure document, including any exhibit thereto.
  • (d) Violations of any provision of this division.
    1. Franchisor and Franchisee agree to be bound by the provisions of any limitation on the period of time in which claims must be brought under applicable law or this Agreement, whichever expires earlier.
    1. No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise. See NASAA STATEMENT OF POLICY REGARDING THE USE OF FRANCHISE QUESTIONNAIRES AND ACKNOWLEDGMENTS. https://www.nasaa.org/wp-content/uploads/2022/11/sop-franchisequestionnaires.pdf

Source: Item 22 — CONTRACTS (FDD pages 61–62)

What This Means (2025 FDD)

Based on the 2025 Franchise Disclosure Document, the specific 'Opening Requirements' for a Cinnaholic franchise are not detailed in the provided excerpts. However, the FDD does address the timing of initial franchise fee payments relative to Cinnaholic's pre-opening obligations. In several states like California, Maryland, Illinois, and Virginia, franchisees are not required to pay the initial franchise fee until Cinnaholic has completed its pre-opening obligations. This is due to financial assurance requirements imposed by state regulatory bodies. These deferrals are designed to protect franchisees, ensuring Cinnaholic fulfills its initial responsibilities before receiving the franchise fee. The FDD also mentions that Cinnaholic has established a system for developing, opening, and operating bakeries specializing in custom gourmet cinnamon rolls.

While the excerpts do not list the specific steps Cinnaholic must complete before opening, they emphasize the importance of Cinnaholic fulfilling its pre-opening obligations. These obligations likely include site selection assistance, training, providing operational manuals, and assistance with store setup and initial marketing. The state-specific addenda highlight that the initial franchise fee is consideration for granting the franchisee the right to use Cinnaholic's system and marks. Therefore, Cinnaholic must provide the necessary support and resources to enable the franchisee to successfully operate the bakery.

To fully understand the opening requirements, a prospective franchisee should carefully review Section 4 of the Franchise Agreement, which is referenced in the state-specific addenda. Additionally, they should ask Cinnaholic for a detailed list of all pre-opening obligations and the timeline for completing them. This will help the franchisee understand what to expect from Cinnaholic and what steps they need to take to ensure a successful opening. Understanding these obligations is crucial for budgeting and planning the launch of the Cinnaholic franchise.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.