Will the royalty fees increase upon assignment of a Cinnaholic franchise?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
19.1.
Assignment by Franchisor.
This Agreement may be unilaterally assigned by the Franchisor and shall inure to the benefit of its successors and assigns.
Franchisee agrees and affirms that Franchisor may sell itself, its assets, the Marks and/or the CINNAHOLIC® System to a third-party; may go public, may engage in private placement of some or all of its securities; may merge, acquire other corporations, or be acquired by another corporation; and/or may undertake a refinancing, recapitalization, leveraged buyout or other economic or financial restructuring.
Franchisee further agrees and affirms that Franchisor has the right, now or in the future, to purchase, merge, acquire or affiliate with an existing competitive or noncompetitive franchise network, chain or any other business regardless of the location of that chain's or business' facilities, and to operate, franchise or license those businesses and/or facilities as CINNAHOLIC® Bakeries operating under the Marks or any other marks following Franchisor's purchase, merger, acquisition or affiliation, regardless of the location of these facilities, which Franchisee acknowledges may be proximate to any of its Bakeries.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
The 2025 Cinnaholic Franchise Disclosure Document does not explicitly state whether royalty fees will increase upon the assignment of a franchise. While the document discusses royalty fees and the conditions under which they are paid, it does not address any changes to these fees in the event of an assignment.
Item 19.1 of the Cinnaholic Franchise Agreement allows Cinnaholic to unilaterally assign the agreement and affirms Cinnaholic's right to sell itself, its assets, the Marks, and/or the Cinnaholic system to a third party. It also states that Cinnaholic may purchase, merge, acquire, or affiliate with an existing competitive or noncompetitive franchise network. However, this section focuses on Cinnaholic's rights regarding assignment and does not mention any potential impact on royalty fees for franchisees.
Since the FDD does not provide specific information on whether royalty fees change upon assignment, it is important for potential franchisees to seek clarification from Cinnaholic. They should ask Cinnaholic directly about the specific terms and conditions related to royalty fees in the event of a franchise assignment to fully understand their financial obligations.