Are there any circumstances where Cinnaholic can repurchase a franchisee's business without the franchisee's consent?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
s to pay when due any amount owed to any creditor, supplier or lessor of the Bakery or the Franchised Site or any taxing authority for federal, state or local taxes (other than amounts being bona fide disputed through appropriate proceedings) and Franchisee does not correct such failure within 10 calendar days after written notice is delivered thereof to Franchisee;
- (viii) Franchisee fails to commence operation of the Bakery at the Franchised Site within 14 months after execution of this Agreement, except for any delay that is agreed to in writing by the Franchisor, in its sole discretion;
- (ix) Franchisee or any of Franchisee's owners are convicted of or plead no contest to a felony, a crime involving moral turpitude or any other crime or offense that is likely to adversely affect the reputation of the CINNAHOLIC® System and the goodwill associated with the Marks;
- (x) Franchisee operatesthe Bakery or any phase of the franchised business in a manner that presents a health or safety hazard to Franchisee's customers, employees or the public;
- (xi) Franchisee makes a material misrepresentation to Franchisor before or after being granted the franchise;
- (xii) Franchisee makes an unauthorized Transfer of this Agreement, the franchise, the Bakery, or an ownership interest in Franchisee;
- (xiii) Franchisee or any Bound Party or any other employee of Franchisee breaches or fails to comply fully with Section 20 above;
- (xiv) Franchisee (a) misuses or makes an unauthorized use of or misappropriates any Mark, (b) commits any act which can be reasonably expected to materially impair the goodwill associated with any Mark, (c) challenges Franchisor's ownership of the Marks, (d) files a lawsuit involving the Marks without Franchisor's consent, or (e) fails to cooperate with Franchisor in the defense of any Mark;
- (xv) Franchisee makes or permits a third party to make any unauthorized use or disclosure of any confidential information or trade secret of Franchisor;
- (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);
- (xvii) The franchised business or the Franchised Site is seized, taken over or foreclosed by a government official in the exercise of his or her duties, or seized, taken over or foreclosed by a creditor, lienholder or lessor, provided that a final judgment against Franchisor remains unsatisfied for 30 days (unless a supersedeas or other appeal bond has been filed), or a levy of execution has been made upon the license granted by this Agreement or any property used in the franchised business, and it is not discharged within five days of such levy;
- (xviii) Franchisee loses for any cause whatsoever right of possession as owner or lessee of the real property on which the Bakery is located.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
Based on the 2025 Cinnaholic Franchise Disclosure Document, there are several circumstances that could lead to the termination of the franchise agreement, potentially resulting in Cinnaholic repurchasing the business. These circumstances primarily revolve around the franchisee's failure to comply with the agreement's terms and Cinnaholic's standards.
Specifically, Cinnaholic may terminate the agreement if the franchisee fails to begin operations within 14 months of signing the agreement, unless Cinnaholic agrees to a delay in writing. Termination can also occur if the franchisee or any of its owners are convicted of a felony or a crime that could harm Cinnaholic's reputation. Furthermore, Cinnaholic can terminate the agreement if the franchisee operates the bakery in a way that poses a health or safety hazard, makes a significant misrepresentation to Cinnaholic, or makes an unauthorized transfer of the franchise or ownership interest.
Additional grounds for termination include breaches of non-compete or confidentiality agreements, misuse of Cinnaholic's trademarks, failure to comply with applicable laws, or failure to pay fines imposed by Cinnaholic for non-compliance with the Operations Manual. These fines can range from $100 to $1000 per violation per day. If a franchisee fails to pay these fines within ten days, Cinnaholic may electronically withdraw the amount from the franchisee's bank account, and this failure to pay constitutes a material default under the agreement. These terms highlight the importance of adhering to Cinnaholic's standards and legal requirements to maintain the franchise agreement.