What state law governs the Cinnaholic Franchise Agreement, and how might this be affected by California law?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
d, and executed this Addendum on | | FRANCHISOR: | DEVELOPER: | | CINNAHOLIC FRANCHISING, LLC | If an Individual: | | By: | Signature: | | Print Name: | Print Name: | | Title: | If other than an Individual: | | | By: Name: Title: |# CINNAHOLIC FRANCHISING, LLC ADDENDUM TO MARKET DEVELOPMENT AGREEMENT
(Illinois)
The following Addendum modifies and supersedes the Cinnaholic Franchising, LLC Market Development Agreement (the "Agreement") with respect to CINNAHOLIC franchises offered or sold to either a resident of the State of Illinois or a non-resident who will be operating a CINNAHOLIC franchise in the State of Illinois pursuant to the Illinois Franchise Disclosure Act of 1987, Ill. Comp. Stat. §§ 705/1 through 705/44, as follows:
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- Illinois law governs the Franchise Agreement(s).
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- Payment of Initial Franchise/Development Fees will be deferred until Franchisor has met its initial obligations to franchisee, and franchisee has commenced doing business. This financial assurance requirement was imposed by the Office of the Illinois Attorney General due to Franchisor's financial condition.
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- In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However a franchise agreement may provide for arbitration to take place outside of Illinois.
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- Your rights upon Termination and Non-Renewal are set forth in sections 19 and 20 of the Illinois Franchise Disclosure Act.
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- In conformance with section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 42–50)
What This Means (2025 FDD)
According to the 2025 Cinnaholic Franchise Disclosure Document, Illinois law governs the Franchise Agreement for Cinnaholic franchises offered or sold to residents of Illinois or non-residents operating a franchise in Illinois. This is specified in the addendum to the Market Development Agreement for Illinois.
For Cinnaholic franchises in California, the Market Development Agreement is modified and superseded by an addendum that references the California Franchise Investment Law and the California Franchise Relations Act. This means that while the general agreement might be based on laws from another state, California-specific laws take precedence for franchises operating within California.
The California addendum also addresses the collection of initial fees. It states that Cinnaholic must defer the collection of all initial fees from California franchisees until all pre-opening obligations are completed and the franchise is open for business. This deferral is due to the California Department determining that Cinnaholic has not demonstrated adequate capitalization and/or relies on franchise fees to fund operations. This condition ensures that franchisees are not paying fees before the franchisor fulfills its obligations.
In summary, while the Cinnaholic Franchise Agreement may generally be governed by a specific state's law (like Illinois for Illinois franchisees), addenda for states like California modify and supersede the agreement to comply with local franchise laws. This includes specific provisions like fee deferrals to protect franchisees, reflecting the regulatory requirements of those states.