Is a sale and subsequent leaseback of the Cinnaholic franchised site subject to the right of first refusal?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
The parties recognize that the terms of this Section 23 do not apply to a sale and subsequent leaseback of the Franchised Site or any furnishings or equipment used thereon, or any other Transfer of the Franchised Site or the furnishings or equipment thereon in connection with any bona fide financing plan.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a sale and subsequent leaseback of the franchised site is not subject to the right of first refusal. This means that if a Cinnaholic franchisee sells their location and then leases it back from the purchaser, Cinnaholic does not have the first option to buy the location under the same terms.
This exemption from the right of first refusal provides Cinnaholic franchisees with more flexibility in managing their assets and financing. A franchisee can unlock capital tied up in their real estate through a sale-leaseback transaction without needing to offer the opportunity to Cinnaholic first. This can be particularly useful for franchisees looking to reinvest in their business, expand to additional locations, or manage their personal finances.
However, this exception is specifically for sale and subsequent leaseback transactions and bona fide financing plans. Any other type of sale of the Cinnaholic Bakery business or assets would still be subject to Cinnaholic's right of first refusal, as detailed in the franchise agreement. This ensures that Cinnaholic retains control over who becomes a franchisee and maintains the standards of the brand.