Is Cinnabon allowed to establish company-owned outlets that compete with a Cinnabon franchisee's location?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
ble cure period (if any), we have the right to reduce or eliminate your Area of Protection, in addition to our other remedies. Except for as described in the previous sentence, the Area of Protection may not be altered before the expiration or termination of the Franchise Agreement. Your territorial protection is not dependent on achievement of a certain sales volume, market penetration or other factors, other than compliance with the Franchise Agreement.
Our Reserved Rights Under the Franchise Agreement
Under the Franchise Agreement, we and our affiliates retain all the rights that we do not specifically grant to you. For example, without limitation, we retain the following rights, without providing any rights or compensation to you:
- (i) We and/or our affiliates may establish or license franchises and/or companyowned businesses offering products or services that are similar or identical to the Approved Products using the System or elements of the System under the Proprietary Marks or any other marks anywhere, including at or near your Accepted Location.
- (ii) If you operate a Co-Branded Bakery (other than a Swirl Bakery) in a Streetside Location and we have granted you an Area of Protection, we and/or our affiliates may establish or license franchises and/or company or affiliate-owned businesses offering products or services that are similar or identical to the Approved Products using the System or elements of the System under the Proprietary Marks or any other marks any other marks (a) anywhere outside of the Area of Protection, (b) in Other Locations inside or outside the Area of Protection, or (c) in businesses other than Co-Branded Bakeries (excluding Swirl Bakeries) inside or outside the Area of Protection.
If you operate a Swirl Bakery in a Streetside Location and we have granted you an Area of Protection, we and/or our affiliates may establish or license franchises and/or company or affiliate-owned businesses offering products or services that are similar or identical to the Approved Products using the System or elements of the System under the Proprietary Marks or
any other marks any other marks (a) anywhere outside of the Area of Protection, (b) in Other Locations inside or outside the Area of Protection, or (c) in businesses other than Swirl Bakeries inside or outside the Area of Protection (including Carvel Co-Branded Bakeries).
- (iii) We and/or our affiliates may produce and/or sell Approved Products or any other products or services, and authorize others to produce and/or sell Approved Products or any other products or services, using the Proprietary Marks, the System, and any other marks and/or systems we desire through any alternative channel of distribution located anywhere, including to and through (a) supermarkets, convenience stores, club stores, and other retail facilities not dedicated to the sale of the Approved Products, (b) mail order and e-commerce channels, and (c) kitchens devoted to the preparation of Products or Approved Products (often referred to as ghost, dark or cloud kitchens), which may use the Marks and may deliver to customers located anywhere.
- (iv) We and/or our affiliates may advertise, or authorize others to advertise, using the Proprietary Marks anywhere.
- (v) We and/or our affiliates may acquire, be acquired by, or merge with another entity with existing businesses or franchises that are similar to or competitive with the Bakery anywhere (including inside and outside the Area of Protection (if any)) and (a) convert the other businesses to be Bakeries operating under the Proprietary Marks and the System (except for Co-Branded Bakeries inside your Area of Protection (if any)), (b) permit the other businesses to continue to operate under another name anywhere (including inside your Area of Protection (if any)), and/or (c) permit the businesses to operate under another name and convert your Bakery and existing Bakeries to such other name.
Source: Item 12 — Territory (FDD pages 82–87)
What This Means (2025 FDD)
According to the 2025 Cinnabon Franchise Disclosure Document, Cinnabon retains the right to establish company-owned businesses that may compete with a franchisee's location. Specifically, Cinnabon and its affiliates may establish or license franchises or company-owned businesses offering similar products under their trademarks anywhere, including near a franchisee's location. This is a standard practice in franchising, as franchisors typically reserve rights not explicitly granted to franchisees.
For Cinnabon franchisees operating Co-Branded Bakeries in Streetside Locations, there are limited protected territorial rights, referred to as an "Area of Protection." However, even within this area, Cinnabon can operate or license single-branded Bakeries, Swirl Bakeries, or Bakeries that do not include the exact combination of brands as the Co-Branded Bakery. This means that while a franchisee might have some protection against direct competition from an identical Co-Branded Cinnabon, they could still face competition from other Cinnabon-owned or franchised concepts.
Furthermore, Cinnabon may open or franchise new Bakeries near a franchisee's location without consulting the franchisee, offering them the first right to open them, or providing any compensation. Other affiliate-owned or franchised Bakeries near a franchisee's Bakery may compete directly with them, provide services in close proximity without compensation, and potentially adversely affect the operation of their Bakery or their development of Bakeries. This lack of an exclusive territory is a critical factor for prospective franchisees to consider, as it introduces a level of competitive risk.
Cinnabon also retains the right to produce and sell approved products through alternative channels of distribution, such as supermarkets, convenience stores, e-commerce, and ghost kitchens, which may deliver to customers located anywhere. Additionally, Cinnabon can acquire or merge with other entities that have similar or competitive businesses, potentially converting existing businesses to Cinnabon Bakeries or allowing them to continue operating under another name, even near a franchisee's location. These reserved rights underscore the importance of carefully evaluating the potential for competition when investing in a Cinnabon franchise.