What section of the Cinnaholic franchise agreement outlines the conditions for termination related to Anti-Terrorism Laws?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
(xvi) Franchisee fails to comply with any federal, state or local law or regulation applicable to the operation of the franchise (including any failure to comply with the Anti-Terrorism Laws (as defined below) as set forth in Section 42.2 below);
(vi) Any misrepresentation under this Section or any violation of the Anti-Terrorism Laws by Franchisee or Franchisee's owners, agents, bankers, employees and affiliates shall constitute grounds for immediate termination of this Agreement and any other agreement Franchisee has entered with Franchisor or an affiliate of Franchisor, in accordance with Section 21.2(xvi) above.
42. FRANCHISEE'S ACKNOWLEDGMENTS
42.1. Anti-Terrorism Laws.
- (i) Franchisee and its owners agree to comply with and/or to assist Franchisor to the fullest extent possible in Franchisor's efforts to comply with Anti-Terrorism Laws.
In connection with such compliance, Franchisee and its owners certify, represent, and warrant that none of their property or interests is subject to being "blocked" under any of the Anti-Terrorism Laws and that Franchisee and its owners are not otherwise in violation of any of the Anti-Terrorism Laws.
- (ii) "Anti-Terrorism Laws" means Executive Order 13224 issued by the President of the United States ("Executive Order 13224"), the Terrorism Sanctions Regulation (Title 31, Part 595 of the U.S.
Code of Federal Regulations), the Foreign Terrorist Organizations Sanctions Regulations (Title 31, Part 597 of the U.S.
Code of Federal Regulations), the Cuban Assets Control Regulations (Title 31, Part 515 of the U.S.
- (iii) Franchisee and its owners certify that none of them, their respective employees, agents, bankers, affiliates or anyone associated with them is listed in the Annex to Executive Order 13224.
Franchisee agrees not to hire (or, if already employed, retain the employment of) any individual who is listed in the Annex. (A copy of the Annex can be accessed on the internet at the following address: http://www.treasury.gov/offices/enforcement/ofac/sanctions/terrorism.html.)
(iv) Franchisee certifies that it has no knowledge or information that, if generally known, would result in (a) Franchisee, (b) Franchisee's owners, employees, agents, bankers or affiliates or (c) anyone associated with Franchisee to be listed in the Annex to Executive Order 13224.
(v) Franchisee is solely responsible for ascertaining what actions it must take to comply with the Anti-Terrorism Laws, and Franchisee specifically acknowledges and agrees that Franchisee's indemnification responsibilities set forth in Section 18 above of this Agreement pertain to Franchisee's obligations under this Section 42.2.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Section 42.2(vi) of the franchise agreement specifies the conditions under which the agreement can be terminated due to violations of Anti-Terrorism Laws. It states that any misrepresentation under this section or any violation of the Anti-Terrorism Laws by the franchisee, its owners, agents, bankers, employees, and affiliates constitutes grounds for immediate termination. This termination can affect the franchise agreement itself and any other agreements the franchisee has with Cinnaholic or its affiliates. The reference to Section 21.2(xvi) further clarifies that failure to comply with any federal, state, or local law, including Anti-Terrorism Laws as defined in Section 42.2, can lead to termination.
Section 42.1 outlines the franchisee's acknowledgment and agreement to comply with Anti-Terrorism Laws, requiring them to assist Cinnaholic in its compliance efforts. Franchisees must certify that their property and interests are not subject to being "blocked" under these laws and that they are not in violation of any Anti-Terrorism Laws. The definition of "Anti-Terrorism Laws" includes Executive Order 13224, the Terrorism Sanctions Regulation, the Foreign Terrorist Organizations Sanctions Regulations, the Cuban Assets Control Regulations, the USA PATRIOT Act, and other relevant laws and regulations.
Section 42.2(iii) requires the franchisee and its owners to certify that none of them, their employees, agents, bankers, affiliates, or anyone associated with them is listed in the Annex to Executive Order 13224, and they agree not to hire or retain anyone listed in the Annex. Section 42.2(iv) further requires the franchisee to certify that they have no knowledge or information that would result in the franchisee or any associated parties being listed in the Annex to Executive Order 13224. The franchisee is solely responsible for understanding and complying with all Anti-Terrorism Laws, and their indemnification responsibilities under Section 18 extend to these obligations.
In practical terms, a prospective Cinnaholic franchisee must ensure strict compliance with all Anti-Terrorism Laws and conduct thorough due diligence to avoid any potential violations. Failure to do so could result in immediate termination of the franchise agreement and any other agreements with Cinnaholic. This highlights the importance of understanding and adhering to these laws to maintain a good standing with the franchisor and avoid legal repercussions.