What post-term restrictions apply to a Cinnabon franchisee regarding competitive businesses?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
- B.
Post-Term.
Beginning at the expiration or termination of this Agreement and for 12 months thereafter or 12 months after a court of competent jurisdiction enters an order enforcing this Section 15.4 of this Agreement, whichever occurs last, (i) at the Accepted Location, (ii) within 3 miles of the Accepted Location, and (iii) within 3 miles of any Business, neither you nor any of your Owners, nor any person or Entity controlling, controlled by, or under common control with you or them, will individually or jointly with others, directly or indirectly, by, through, on behalf of, or in conjunction with, any person or Entity: (a) own, manage, engage in, be employed by, advise, make loans to, participate in, consult for, or have any other interest in a Competitive Business or (b) divert or attempt to divert any business from any Business.
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to the 2025 Cinnabon FDD, post-term restrictive covenants dictate what a franchisee can and cannot do after the franchise agreement expires or is terminated. Specifically, for a period of 12 months after the agreement ends, or 12 months after a court order enforcing these restrictions, whichever is later, the franchisee faces certain limitations.
During this 12-month period, the franchisee (and their owners, or anyone controlled by them) is restricted from engaging in any Competitive Business. This includes owning, managing, working for, advising, lending to, participating in, or consulting for such a business. This restriction applies (i) at the original Accepted Location of the Cinnabon franchise, (ii) within 3 miles of the Accepted Location, and (iii) within 3 miles of any other Cinnabon Business.
A Competitive Business is defined as one that either (a) derives more than 20% of its revenue from the retail or wholesale of Competing Products (specified in Schedule A), (b) is the same as or similar to the Cinnabon business concept, or (c) grants franchises or licenses for these types of businesses. The franchisee is also prohibited from diverting business away from any Cinnabon Business during this period. These restrictions aim to protect Cinnabon's market and brand integrity by preventing former franchisees from directly competing using the knowledge and resources gained during their franchise term.