Under what condition related to Cinnaholic's financial status will the payment of Initial Franchise/Development Fees be deferred in Illinois?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
ADDENDUM REQUIRED BY THE STATE OF ILLINOIS
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- Illinois law governs the Franchise Agreement(s).
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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.
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- In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However a franchise agreement may provide for arbitration to take place outside of Illinois.
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- Your rights upon Termination and Non-Renewal are set forth in sections 19 and 20 of the Illinois Franchise Disclosure Act.
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- In conformance with section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
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- No statement, questionnaire or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of: (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on behalf of the Franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 27–35)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, in the state of Illinois, the payment of Initial Franchise/Development Fees will be deferred under a specific condition. This deferral is directly linked to Cinnaholic's financial condition. The Office of the Illinois Attorney General imposed this financial assurance requirement.
Specifically, the payment of these fees is deferred until Cinnaholic has fulfilled its initial obligations to the franchisee. This includes all the necessary steps and support Cinnaholic is required to provide to help the franchisee get their business off the ground.
Furthermore, the deferral lasts until the franchisee has actually commenced business operations. This means that the franchisee has opened their Cinnaholic location and is actively serving customers. This condition ensures that franchisees in Illinois are not required to pay the initial fees until they are ready to start generating revenue, providing a level of financial protection.