For Cinnaholic, what is the definition of a 'Bound Party' in relation to the non-compete agreement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition to and not in limitation of any other restrictions on Developer contained herein, Developer and Developer's spouse, and, if Developer is not an individual, its shareholders, members, partners and managers, as applicable, and their spouses (each, a "Bound Party"), agree that they will not, during the term of this Agreement, directly or indirectly, for and on behalf of itself, himself, herself or any other person or entity, (a) have any direct or indirect interest as a disclosed or beneficial owner in a Competitive Business (as defined below), regardless of location or (b) perform services as a director, officer, manager, employee, consultant, representative, agent, or otherwise for a Competitive Business, regardless of location.
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a "Bound Party" is defined in relation to the non-compete agreement. Specifically, the term applies to the developer (franchisee), the developer's spouse, and if the developer is not an individual, it includes its shareholders, members, partners, and managers, as well as their spouses. These "Bound Parties" are subject to certain restrictions during the term of the Franchise Agreement and for one year after its termination or transfer.
The non-compete agreement restricts Bound Parties from having any direct or indirect interest in a Competitive Business, regardless of its location, and from performing services for a Competitive Business as a director, officer, manager, employee, consultant, representative, or agent. After the agreement ends, the restrictions apply within a five-mile radius of any Cinnaholic Bakery.
Each Bound Party must sign and deliver a Personal Covenants agreement, agreeing to be personally bound by the non-compete, non-solicitation, and confidentiality provisions. This ensures that all individuals with a significant connection to the franchisee are aware of and compliant with these restrictions, protecting Cinnaholic's interests and confidential information. Prospective franchisees should carefully review these restrictions and ensure that all Bound Parties understand their obligations.