For Cinnabon franchises sold in Indiana, what geographical limitation is placed on the post-term covenant not to compete as described in Section 15.4.B of the Franchise Agreement?

According to the 2025 Cinnabon Franchise Disclosure Document, for franchises sold in Indiana, Section 15.4.B of the Franchise Agreement, concerning post-term restrictive covenants, is revised. Specifically, the geographical extent of the post-term covenant not to compete is limited to an area of reasonable size. This revision is applicable to all Cinnabon franchises sold within the state of Indiana.

This means that if a Cinnabon franchisee in Indiana leaves the system, the non-compete agreement that restricts them from opening a similar business will be limited to a 'reasonable size' geographical area. The term 'reasonable size' is subjective and could be subject to interpretation or legal challenges. Without a precise definition, it is difficult to determine the exact scope of the restriction.

This revision offers some protection to Cinnabon franchisees in Indiana, preventing Cinnabon from enforcing an overly broad non-compete agreement that could unduly restrict their ability to earn a living after leaving the franchise system. Prospective franchisees should seek legal counsel to understand how Indiana law defines 'reasonable size' in the context of non-compete agreements and what factors a court might consider when determining the enforceability of such a restriction. They should also inquire with the franchisor to see if they can provide examples of what they consider a reasonable size.