Under the Cinnaholic franchise agreement, which sections cover the franchisee's obligation for site selection and acquisition/lease?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
yalty and rewards program costs, and integration with our POS system.
Site Selection. Each proposed site for a Bakery established under your Development Agreement must be located in your Area of Responsibility. Within our discretion, we may consider sites proposed by you outside your Area of Responsibility. The proposed site for your Bakery must be accepted by us along with any applicable lease, sublease or purchase agreement. Under the Development Agreement, we will determine or approve the location of future units and any territories for those units, and the then-current standards for sites and territories will apply. We may help you select the site for your Bakery, although we are not obligated to do so. The site for your Bakery may be leased or owned by you. Our approval of a site will be based on the information you give us to review, including a site plan. The information we need should include: (i) square footage; (ii) traffic patterns, flow, and total count; (iii) density and income level of the surrounding population; (iv) land and building costs; (v) zoning patterns; (vi) surrounding educational and recreational facilities; (vii) terms of the lease, if any; (viii) the distance from competing businesses, including other CINNAHOLIC® Bakeries; and (ix) other factors having a substantial bearing on the proposed site. (See Development Agreement, Section 7.) In addition, you must submit for acceptance by us proposed site and construction plans and any modification to our specifications you propose. The construction of the premises must be completed according to our specifications. If you lease the premises, you and the landlord must enter into a Collateral Assignment of Lease in the form attached as Exhibit B to the Development Agreement, which includes, among other things, a provision that permits you to assign your interest in the premises to us when your Franchise Agreement expires or terminates. If we do not approve a site, you must propose a new site. If we and you are unable to agree upon a site for your Bakery and, as a result, you fail to meet your Development Schedule, we may terminate your Development Agreement. While there is no contractual limit on the time it takes us to approve or disapprove your proposed site and lease, once we have all the necessary documentation for review, we typically take 30-60 days to approve or disapprove the proposed site and lease.
Start-up Time. We expect that you will open your Bakery within 8 to 12 months after you sign the Franchise Agreement. The factors that affect this timing are financing, building permits, zoning, local ordinance issues, and delayed installation of equipment, fixtures, and signs. If you do not commence operation of the Bakery within 12 months after the effective date of the Franchise Agreement, we may terminate the Franchise Agreement.
Conferences and Meetings. Although we are not obligated to do so under the Franchise Agreement, we may hold periodic conferences, management meetings, or refresher courses to discuss sales techniques, personnel training, bookkeeping, accounting, inventory control, and the like. These conferences may be held at our corporate/training location or any other place that we may designate and may last 1 or 2 days. Currently we hold meetings via zoom, and may hold one in-person meeting a year. We may charge you a reasonable fee to attend these meetings or conferences, which we expect will not be more than $500 per person (see Item 6). You must pay your own travel and accommodation expenses. (See Franchise Agreement, Sections 14.3 and 14.4.)
Electronic Funds Transfer. You must pay all fees or contributions due under the Franchise Agreement by automated bank draft or other reasonable means necessary to ensure we receive payment of all fees and contributions. You must comply with any of our payment instructions, including executing any forms which grant us the right to debit your account on a weekly basis for payment of royalty, management and advertising fees and contributions and other fees and contributions to be paid to us or required by us under the Franchise Agreement. (See Franchise Agreement, Section 5.3.)
Training. Below is a description of our initial training program as of the date of this Disclosure Document. Training programs are subject to change as procedures and processes change. You must send a minimum of 1 manager to become certified through the training program for each location that you open and operate. We will not charge you a training or registration fee for the participation of these managers in the training program; however, you must pay all travel and living expenses (such as transportation, lodging, meals, and compensation) for the managers who attend the training. These individuals are designated by you as having primary responsibility for managing your Bakery. We may permit additional managers of your Bakery to attend the initial training program, and, if we do, you will be responsible for all costs and expenses incurred by us in providing the training to these additional managers. Unless you will be primarily responsible for managing the Bakery, you do not have to attend initial training. Your designated managers must successfully complete the training program to become certified managers, as determined by us, at least one day before the Bakery opens for business.
Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 26–27)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the franchisee's obligations regarding site selection and acquisition/lease are detailed in several sections of the franchise agreement and related documents. Item 11 discusses site selection, stating that each proposed site must be located in the franchisee's Area of Responsibility and accepted by Cinnaholic, along with any applicable lease, sublease, or purchase agreement. Cinnaholic may assist in site selection but is not obligated to do so. The franchisee must provide information for review, including square footage, traffic patterns, density and income levels, land and building costs, zoning patterns, surrounding facilities, lease terms, and distance from competitors. The franchisee must also submit proposed site and construction plans for acceptance, and construction must meet Cinnaholic's specifications. If the premises are leased, a Collateral Assignment of Lease must be executed. Failure to agree on a site or meet the Development Schedule may result in termination of the Development Agreement. While there is no contractual limit on the time it takes Cinnaholic to approve or disapprove a proposed site and lease, once Cinnaholic has all the necessary documentation for review, it typically takes 30-60 days to approve or disapprove the proposed site and lease.
Section 3.1 of the Franchise Agreement, as described in Item 22, also pertains to the franchised site. It states that the rights granted to the franchisee are non-exclusive and restricted to a single Cinnaholic Bakery at the address specified in Exhibit A. The franchised site must be used exclusively to operate a bakery. The franchisee must execute a Collateral Assignment of Lease with the lessor/sublessor, complying with obligations in the Development Agreement related to the lease and construction. The rights are specific to the approved site and cannot be transferred without Cinnaholic's prior written approval. After signing a lease, the franchisee will pay a Project Management Fee, currently $1,795, for assistance in developing the bakery site.
Item 23 references Section 7 of the Development Agreement, which further elaborates on site selection and acceptance. The developer (franchisee) is responsible for locating proposed sites, and Cinnaholic may offer advice but is not liable for it. The franchisee must submit site data, information, and a copy of any lease, sublease, or purchase agreement. Cinnaholic will either accept or reject the proposed site based on its site selection policies. As a condition of acceptance for leased or subleased sites, the franchisee must ensure the Collateral Assignment of Lease is signed by the lessor/sublessor. Cinnaholic's acceptance may be conditional upon the franchisee meeting certain requirements.