Can Cinnaholic require a franchisee to assent to a release that deprives them of rights and protections under the Franchise Act?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU:
(A) A PROHIBITION ON THE RIGHT OF A FRANCHISEE TO JOIN AN ASSOCIATION OF FRANCHISEES.
(B) A REQUIREMENT THAT A FRANCHISEE ASSENT TO A RELEASE, ASSIGNMENT, NOVATION, WAIVER, OR ESTOPPEL WHICH DEPRIVES A FRANCHISEE OF RIGHTS AND PROTECTIONS PROVIDED IN THIS ACT.
THIS SHALL NOT PRECLUDE A FRANCHISEE, AFTER ENTERING INTO A FRANCHISE AGREEMENT, FROM SETTLING ANY AND ALL CLAIMS.
- (C) A PROVISION THAT PERMITS A FRANCHISOR TO TERMINATE A FRANCHISE BEFORE THE EXPIRATION OF ITS TERM EXCEPT FOR GOOD CAUSE.
GOOD CAUSE SHALL INCLUDE THE FAILURE OF THE FRANCHISEE TO COMPLY WITH ANY LAWFUL PROVISIONS OF THE FRANCHISE AGREEMENT AND TO CURE SUCH FAILURE AFTER BEING GIVEN WRITTEN NOTICE THEREOF AND A REASONABLE OPPORTUNITY, WHICH IN NO EVENT NEED BE MORE THAN 30 DAYS, TO CURE SUCH FAILURE.
- (D) A PROVISION THAT PERMITS A FRANCHISOR TO REFUSE TO RENEW A FRANCHISE WITHOUT FAIRLY COMPENSATING THE FRANCHISEE BY REPURCHASE OR OTHER MEANS FOR THE FAIR MARKET VALUE, AT THE TIME OF EXPIRATION, OF THE FRANCHISEE'S INVENTORY, SUPPLIES, EQUIPMENT, FIXTURES, AND FURNISHINGS.
PERSONALIZED MATERIALS WHICH HAVE NO VALUE TO THE FRANCHISOR AND INVENTORY, SUPPLIES, EQUIPMENT, FIXTURES, AND FURNISHINGS NOT REASONABLY REQUIRED IN THE CONDUCT OF THE FRANCHISED BUSINESS ARE NOT SUBJECT TO COMPENSATION.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 27–35)
What This Means (2025 FDD)
According to the 2025 Cinnaholic Franchise Disclosure Document, the enforceability of certain provisions, including those requiring a franchisee to waive rights or protections under franchise laws, varies by state. For instance, Michigan law explicitly voids any requirement for a franchisee to assent to a release, assignment, waiver, or estoppel that deprives them of rights and protections under the Michigan Franchise Act. This protection ensures that Cinnaholic franchisees in Michigan cannot be forced to relinquish their legal rights through such clauses in the franchise agreement. However, a franchisee can settle claims after entering into the agreement.
Similarly, in Washington, a release or waiver of rights in the franchise agreement is void if it requires the franchisee to waive compliance with any provision under the Washington Franchise Investment Protection Act, unless it's part of a negotiated settlement with independent counsel after the agreement is in effect. This aims to prevent Cinnaholic from using the initial franchise agreement to force franchisees into waiving their rights but allows for settlements of disputes reached later with proper representation. California law also deems void and unenforceable any provision in a franchise agreement that disclaims or denies representations made by Cinnaholic or reliance on those representations by the franchisee, or violations of the law.
In Minnesota, Cinnaholic is prohibited from requiring a franchisee to assent to a general release, although a franchisee may enter into a release as part of a voluntary settlement of disputes. Additionally, Minnesota law prevents Cinnaholic from requiring litigation to be conducted outside of Minnesota, mandating waiver of a jury trial, or requiring consent to liquidated damages, termination penalties, or judgment notes. These state-specific regulations highlight the importance of franchisees understanding the legal protections available to them in their respective states and underscore that certain standard franchise agreement terms may not be enforceable in all jurisdictions.
Prospective Cinnaholic franchisees should consult with legal counsel to understand the specific franchise laws in their state and how they apply to the franchise agreement. This is particularly important given the variations in state laws regarding waivers, releases, and other provisions that could impact a franchisee's rights and remedies. Franchisees should also be aware that court decisions may supersede the franchise agreement, and franchise agreement provisions are subject to state law.