For Cinnaholic, what constitutes a 'Competitive Business'?

According to Cinnaholic's 2025 Franchise Disclosure Document, a "Competitive Business" is defined as any business that operates or franchises a bakery or other food service that is engaged in the retail or wholesale production or sale of baked goods, including cinnamon rolls and other baked goods. To be considered a competitive business, more than 50% of its revenue must come from the sale of cinnamon rolls. This definition excludes other Cinnaholic bakeries operated under a franchise agreement with Cinnaholic.

This definition is important because Cinnaholic franchisees are subject to non-compete restrictions during the term of their franchise agreement and for one year after the agreement expires or is terminated. These restrictions prevent franchisees and their spouses (or shareholders, members, partners, and managers if the franchisee is not an individual) from having an interest in or working for a Competitive Business.

However, franchisees are allowed to own securities in a Competitive Business if the securities are listed on a stock exchange or traded over-the-counter, and if they represent 5% or less of the outstanding shares of that class of securities. This exception allows franchisees to make minor investments in publicly traded companies that might be considered competitive without violating the non-compete agreement. Understanding this definition is crucial for prospective franchisees to avoid potential conflicts of interest and legal issues during and after their franchise agreement with Cinnaholic.