Will Cinnaholic unreasonably withhold consent to transfer the franchise to the deceased or disabled franchisee's spouse, heirs, or immediate family?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor shall not unreasonably withhold its consent to the Transfer of this Agreement or any ownership interest to the deceased or disabled Franchisee's or Equity Holder's spouse, heirs or members of his or her immediate family, provided all requirements of Section 19.4 have been complied with (except payment of the transfer fee, which shall not apply to such Transfers).
A "Disability" shall have occurred with respect to Franchisee if Franchisee, or, if Franchisee is a corporation, partnership or limited liability company, its controlling shareholder, partner, member or other equity holder, is unable to actively participate in its activities as Franchisee hereunder for any reason for a continuous period of six months.
As used in this Section 19.3, "Franchisee" may include a disabled or deceased controlling shareholder, partner or member where the context so requires.
- 19.4.
Approval of Assignment.
Franchisor's approval of any Transfer is, in all cases, contingent upon the following: the purchaser and/or the controlling persons of the purchaser having a satisfactory credit rating, being of good moral character, having business qualifications satisfactory to Franchisor, being willing to comply with Franchisor's training requirements and being willing to enter into an agreement in writing to assume and perform all of Franchisee's duties and obligations hereunder and/or enter into a new Franchise Agreement, if so requested by Franchisor, and agreeing to enter into any and all agreements with Franchisor that are being required of all new franchisees, including a guaranty agreement, or any other agreement which may require payment of different or increased fees from those paid under this Agreement; provided, however, the amount of the Royalty Fees paid hereunder shall not be increased upon an assignment;
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic will not unreasonably withhold consent to the transfer of the franchise agreement or any ownership interest to the deceased or disabled franchisee's spouse, heirs, or members of their immediate family. However, this is conditional upon meeting the requirements outlined in Section 19.4 of the franchise agreement. The only exception to these requirements is the payment of a transfer fee, which is waived in the case of such transfers to a spouse, heir, or immediate family member.
Section 19.4 specifies that Cinnaholic's approval of any transfer is contingent upon several factors related to the purchaser. These include having a satisfactory credit rating, being of good moral character, possessing business qualifications satisfactory to Cinnaholic, and being willing to comply with Cinnaholic's training requirements. Additionally, the purchaser must be willing to enter into a written agreement to assume and perform all of the franchisee's duties and obligations under the existing agreement or enter into a new franchise agreement if requested by Cinnaholic. They must also agree to enter into any and all agreements with Cinnaholic that are being required of all new franchisees, including a guaranty agreement, or any other agreement which may require payment of different or increased fees from those paid under the current agreement. It is important to note that the royalty fees paid will not increase upon assignment.
A "Disability" is defined in the Cinnaholic Franchise Agreement as occurring when the franchisee, or the controlling shareholder, partner, member, or other equity holder if the franchisee is a business entity, is unable to actively participate in the franchise activities for a continuous period of six months. This definition clarifies the circumstances under which the transfer provisions related to disability would apply.
This clause provides some reassurance to franchisees that Cinnaholic will facilitate the transfer of the franchise to close family members in the event of death or disability, provided that the family member meets the standard requirements for franchisees. However, prospective franchisees should carefully review Section 19.4 of the franchise agreement to fully understand the conditions that must be met for the transfer to be approved.