Is the security deposit required by the lessor for a Cinnaholic franchise refundable?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Because of the wide variation in lease rates for retail space, you should thoroughly investigate the costs of obtaining a location.
- Note 3: Your lessor may require a security deposit before you take possession of the premises.
This deposit may or may not be refundable.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 18–21)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, whether the security deposit required by the lessor is refundable is not guaranteed. Item 7 includes a note stating that the lessor may require a security deposit before the franchisee takes possession of the premises. The FDD explicitly states that this deposit "may or may not be refundable."
This means a prospective Cinnaholic franchisee needs to carefully review the lease agreement and negotiate the terms of the security deposit with the lessor. The initial investment table in Item 7 estimates this security deposit to range from $3,000 to $10,000, so understanding the conditions for its return is financially significant.
Franchisees should clarify the conditions under which the deposit will be refunded, such as adherence to lease terms, property condition upon termination, and any potential deductions for damages or unpaid rent. This is a standard practice in commercial leasing, but the franchisee bears the responsibility to ensure favorable terms are negotiated and documented in the lease agreement.