What are the post-termination obligations of a Cinnaholic developer if the developer terminates the agreement due to the franchisor's breach?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
titled to exercise, any of the rights, powers and privileges granted by the Franchise Agreement, including, without limitation, the right to use the Marks or the CINNAHOLIC® System; (ii) the execution of this Agreement shall not be deemed to grant any such rights, powers or privileges to Developer; and (iii) Developer may not under any circumstances commence operations of any CINNAHOLIC® Bakery before Franchisor's execution of a Franchise Agreement for that particular Bakery.
12. TERMINATION
- 12.1. Termination by Developer. Developer may terminate this Agreement if Developer is in substantial compliance with this Agreement and Franchisor materially breaches this Agreement and fails to cure such material breach within 90 days after written notice thereof is delivered to Franchisor. Notwithstanding the foregoing, if the breach is curable but is of a nature which cannot reasonably be cured within such 90 day period and Franchisor has commenced and is continuing to make good faith efforts to cure such breach, Franchisor shall be given an additional 60 day period to cure the same, and this Agreement shall not terminate. In the event of termination by Developer, all post-termination obligations of Developer described herein shall not be waived but shall be strictly adhered to by Developer.
- 12.2. Termination by Franchisor without a Cure Period. Franchisor may immediately terminate this Agreement upon written notice to Developer, without opportunity to cure, if:
- (i) Developer files a petition under any bankruptcy or reorganization law, becomes insolvent, or has a trustee or receiver appointed by a court of competent jurisdiction for all or any part of its property;
- (ii) Developer seeks to effect a plan of liquidation, reorganization, composition or arrangement of its affairs, whether or not the same shall be subsequently approved by a court of competent jurisdiction;
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, if a developer terminates the agreement due to Cinnaholic's material breach, the developer is still obligated to adhere to all post-termination obligations outlined in the agreement. These obligations include compliance with the post-termination/post-expiration covenant not to compete and abiding by restrictions on the use of Cinnaholic's confidential and proprietary information.
Specifically, the developer must continue to protect Cinnaholic's confidential information, which includes trade secrets, for a period of five years after termination, unless the information no longer constitutes a trade secret. The developer is also required to return any copies of documents containing confidential information and permanently delete any confidential information stored electronically.
Additionally, the termination of the agreement does not relieve the developer of any outstanding debts or liabilities to Cinnaholic or its affiliates. The developer must also adhere to the non-compete clause. These obligations survive the termination of the agreement, ensuring the protection of Cinnaholic's interests even after the developer agreement ends.