Before transferring a Cinnaholic franchise, must the franchisee first offer to sell the interest to Cinnaholic?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall not subfranchise, sell, assign, transfer, merge, convey or encumber (each, a "Transfer"), the Bakery, the Franchised Site, this Agreement or any of its rights or obligations hereunder, or suffer or permit any such Transfer of the Bakery, the Franchised Site, this Agreement or its rights or obligations hereunder to occur by operation of law or otherwise without the prior express written consent of Franchisor.
In addition, if Franchisee is a corporation, limited liability company, partnership, business trust, or similar association or entity, the shareholders, members, partners, beneficiaries, investors or other equity holders, as the case may be, may not Transfer their equity interests in such corporation, limited liability company, partnership, business trust, or similar association or entity, without the prior written consent of Franchisor.
Furthermore, in the event that any shareholder, member, partner, investor or other equity holder of Franchisee (the "Equity Holder") is a corporation, limited liability company, partnership, business trust, or similar association or entity, the interests of the shareholders, members, partners, beneficiaries, investors or other equity holders, as the case may be, in such Equity Holder, may not be Transferred, without the prior written consent of Franchisor.
Franchisor will not unreasonably withhold consent to a Transfer provided the requirements of Section 19.4 have been satisfied.
Any Transfer in violation of this Section shall be void and of no force and effect.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a franchisee is not allowed to transfer their franchise without prior written consent from Cinnaholic. Specifically, the franchisee cannot subfranchise, sell, assign, transfer, merge, convey, or encumber the bakery, the franchised site, the agreement, or any associated rights or obligations without Cinnaholic's express written consent. This restriction extends to transfers occurring by operation of law.
If the franchisee is a corporation, limited liability company, partnership, business trust, or similar entity, the equity holders (shareholders, members, partners, beneficiaries, investors) also cannot transfer their equity interests without Cinnaholic's prior written consent. This requirement extends further to the equity holders of those equity holders. Cinnaholic states that it will not unreasonably withhold consent to a transfer if the requirements of Section 19.4 of the agreement are met. Any transfer that violates these conditions will be considered void and without effect.
While the FDD states conditions under which a franchisee can transfer their franchise, it does not state that a franchisee must first offer to sell the franchise back to Cinnaholic. Prospective franchisees should clarify the conditions of Section 19.4 with Cinnaholic to fully understand the requirements for a transfer to be approved.