Why did Cinnaholic terminate its Franchise Agreement with Calipto Foods, Inc.?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
ismissed in August, 2024.
In Re: Cinnaholic Franchising, LLC v. Calipto Foods, Inc., Case No. 30-2022-01250359-CU-PT-CJC.
Franchisor terminated its Franchise Agreement with Calipto Foods, Inc. on December 30, 2021, and filed suit to compel arbitration on March 17, 2022, in the Superior Court of California for Orange County. Former franchisee initially opposed Franchisor's motion to compel arbitration. An order stipulating to arbitration was entered in the case on August 30, 2022. This case was dismissed without prejudice May 22, 2023.
In Re: Cinnaholic Franchising, LLC v. Calipto Foods, Inc. and Philip Edwards, AAA Arbitration Case No. 01-23-0000-2264.
Franchisor brought a claim for breach of contract against a terminated franchisee and its guarantor. Respondents Calipto Foods Inc. and Philip Edwards counterclaimed that the Franchisor's claims were frivolous and sought unspecified damages and attorney's fees. The arbitration concluded on or about January 18, 2024, with an award in favor of the Franchisor for $42,234.22 in liquidated damages and in favor of the Franchisor on R
Source: Item 3 — LITIGATION (FDD pages 9–11)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic terminated its Franchise Agreement with Calipto Foods, Inc. on December 30, 2021. Subsequently, on March 17, 2022, Cinnaholic filed suit to compel arbitration in the Superior Court of California for Orange County. While the document states that Cinnaholic terminated the agreement, it does not specify the reasons for the termination.
The former franchisee, Calipto Foods, Inc., initially opposed Cinnaholic's motion to compel arbitration. However, an order stipulating to arbitration was entered on August 30, 2022, and the case was later dismissed without prejudice on May 22, 2023. Following this, Cinnaholic pursued a claim for breach of contract against Calipto Foods Inc. and its guarantor, Philip Edwards, in AAA Arbitration Case No. 01-23-0000-2264.
Calipto Foods Inc. and Philip Edwards counterclaimed that Cinnaholic's claims were frivolous and sought unspecified damages and attorney's fees. The arbitration concluded on or about January 18, 2024, with an award in favor of Cinnaholic for $42,234.22 in liquidated damages. The arbitrator also ruled in favor of Cinnaholic on the respondents' counterclaims. Prospective franchisees should note that Cinnaholic is willing to pursue legal action against franchisees it believes are in breach of contract.