Under what circumstances can the Cinnaholic Franchisor immediately terminate the agreement without a cure period?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
delivered to Franchisor. Notwithstanding the foregoing, if the breach is curable but is of a nature which cannot reasonably be cured within such 90 day period and Franchisor has commenced and is continuing to make good faith efforts to cure such breach, Franchisor shall be given an additional 60 day period to cure the same, and this Agreement shall not terminate. In the event of termination by Developer, all post-termination obligations of Developer described herein shall not be waived but shall be strictly adhered to by Developer.
- 12.2. Termination by Franchisor without a Cure Period. Franchisor may immediately terminate this Agreement upon written notice to Developer, without opportunity to cure, if:
- (i) Developer files a petition under any bankruptcy or reorganization law, becomes insolvent, or has a trustee or receiver appointed by a court of competent jurisdiction for all or any part of its property;
- (ii) Developer seeks to effect a plan of liquidation, reorganization, composition or arrangement of its affairs, whether or not the same shall be subsequently approved by a court of competent jurisdiction; it being understood that in no event shall this Agreement or any right or interest hereunder be deemed an asset in any insolvency, receivership, bankruptcy, composition, liquidation, arrangement or reorganization proceeding;
- (iii) Developer has an involuntary proceeding filed against it under any bankruptcy, reorganization, or similar law and such proceeding is not dismissed within 60 days thereafter;
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the franchisor can immediately terminate the agreement with a developer without allowing an opportunity to cure under specific circumstances. These circumstances include if the developer files for bankruptcy or reorganization, becomes insolvent, or has a trustee or receiver appointed for their property. Cinnaholic can also terminate the agreement if the developer seeks to liquidate, reorganize, or arrange their affairs, or if the developer is dissolved either voluntarily or involuntarily.
Additionally, Cinnaholic can immediately terminate the agreement if the developer breaches or defaults under any Franchise Agreement or any other agreement between the developer and Cinnaholic, and the breach is not cured within the required time period. The agreement can also be terminated if the developer receives at least three default notices from Cinnaholic within a 12-month period, regardless of whether the default is subject to a cure period or is cured after notice.
These termination conditions are fairly standard in franchising, as they protect Cinnaholic's interests in cases of severe financial distress, repeated violations, or failure to adhere to contractual obligations by the developer. Prospective Cinnaholic developers should understand these conditions and ensure they have the financial stability and operational discipline to avoid triggering these immediate termination clauses.