Under what condition is the payment of the initial franchise fee for a Cinnaholic franchise deferred in Illinois?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
The following Addendum modifies and supersedes the Cinnaholic Franchising, LLC Franchise 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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- 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
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, for franchises offered or sold to residents of Illinois, or non-residents operating a Cinnaholic franchise in Illinois, the payment of the initial franchise fee is deferred. This deferral is conditional upon Cinnaholic meeting its initial obligations to the franchisee and the franchisee commencing business operations. This requirement was mandated by the Office of the Illinois Attorney General due to Cinnaholic's financial condition.
This condition is outlined in an addendum to the standard Cinnaholic Franchise Agreement, which specifically addresses franchises within Illinois. The addendum modifies and supersedes the original agreement to comply with the Illinois Franchise Disclosure Act of 1987. This ensures that franchisees are not required to pay the initial franchise fee until Cinnaholic has fulfilled its pre-opening obligations, providing a level of financial security for the franchisee.
For a prospective Cinnaholic franchisee in Illinois, this deferral of the initial franchise fee represents a significant benefit. It reduces the upfront financial burden and aligns the payment with the commencement of business operations. This arrangement mitigates some of the initial financial risk, as the franchisee only pays the fee once Cinnaholic has met its obligations and the business is ready to open. This condition is a direct result of regulatory oversight aimed at protecting franchisees, given Cinnaholic's financial standing.