Does Cinnaholic have a right of first refusal to purchase the assets of a Cinnaholic franchise on the same terms as a third party?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
- (H) A PROVISION THAT REQUIRES THE FRANCHISEE TO RESELL TO THE FRANCHISOR ITEMS THAT ARE NOT UNIQUELY IDENTIFIED WITH THE FRANCHISOR. THIS SUBDIVISION DOES NOT PROHIBIT A PROVISION THAT GRANTS TO A FRANCHISOR A RIGHT OF FIRST REFUSAL TO PURCHASE THE ASSETS OF A FRANCHISE ON THE SAME TERMS AND CONDITIONS AS A BONA FIDE THIRD PARTY WILLING AND ABLE TO PURCHASE THOSE ASSETS, NOR DOES THIS SUBDIVISION PROHIBIT A PROVISION THAT GRANTS THE FRANCHISOR THE RIGHT TO ACQUIRE THE ASSETS OF A FRANCHISE FOR THE MARKET OR APPRAISED VALUE OF SUCH ASSETS IF THE FRANCHISEE HAS BREACHED THE LAWFUL PROVISIONS OF THE FRANCHISE AGREEMENT AND HAS FAILED TO CURE THE BREACH IN THE MANNER PROVIDED IN SUBDIVISION (C).
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 27–35)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic is granted a right of first refusal to purchase the assets of a franchise. This means that if a franchisee receives a legitimate offer from a third party to buy their Cinnaholic franchise assets, the franchisee must first offer Cinnaholic the opportunity to purchase those assets under the same terms and conditions as the third party's offer.
This right of first refusal allows Cinnaholic to maintain control over who enters the franchise system and to ensure that the brand's standards and reputation are upheld. It also provides Cinnaholic with an opportunity to expand its company-owned operations if it deems it beneficial.
For a prospective Cinnaholic franchisee, this clause means that selling the franchise to a third party is not guaranteed. Cinnaholic has the power to step in and purchase the franchise themselves, potentially disrupting the franchisee's plans. However, Cinnaholic can only exercise this right if they match the terms of the third-party offer, ensuring the franchisee receives fair market value for their assets. This provision does not prohibit Cinnaholic from acquiring the assets of a franchise for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach.