May a Cinnaholic developer be required to sign a then-current Franchise Agreement upon establishing each additional outlet under the Development Agreement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
You will operate each Bakery to be developed under the Development Agreement under a separate Franchise Agreement. Upon establishing each additional outlet under the Development Agreement, a developer may be required to sign a then-current Franchise Agreement, which may differ from the current Franchise Agreement included within this FDD. The Franchise Agreement will grant you a protected territory (the "Franchise Territory"), the size and scope of which will be determined on a case-by-case basis by considering the population, traffic flow, presence of businesses, location of competitors (including other CINNAHOLIC® franchisees), demographics and other market conditions surrounding the location of the Bakery. The Franchise Territory may not be unilaterally altered, and the continuation of the Franchise Territory during the term of the Franchise Agreement does not depend on a certain sales or revenue volume or market penetration. We may not operate, or permit any other person to operate, a CINNAHOLIC® Bakery in the Franchise Territory during the term of the Franchise Agreement; although, we may distribute products, or permit others to distribute products, which are the same or similar to those offered by CINNAHOLIC® Bakeries, whether under the Marks or under other trademarks, trade names, service marks, logos or other commercial symbols and through any channel of distribution or method other than a CINNAHOLIC® Bakery within the Franchise Territory, including sales through catalogs, e-commerce, mail order, kiosks, mass merchandise, grocery stores, supermarkets, mom & pops, gourmet shops, warehouse clubs, and convenience and other stores, even if you sell these products at your Bakery. We may also operate or permit others to operate CINNAHOLIC® bakeries at non-traditional locations within your Franchise Territory such as sports stadiums, arenas, universities and schools, hospitals, airports, shopping malls, and the like.
Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 6–8)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a developer may be required to sign the then-current Franchise Agreement when establishing each additional Cinnaholic outlet under a Development Agreement. This new Franchise Agreement may differ from the one included in the current FDD.
This means that the terms and conditions under which a Cinnaholic franchisee operates could change over the course of their Development Agreement as they open new locations. These changes could include alterations to fees, operational requirements, or brand standards. The Franchise Agreement grants a protected territory, the size and scope of which is determined on a case-by-case basis considering factors like population, traffic flow, presence of businesses, location of competitors (including other Cinnaholic franchisees), demographics, and other market conditions surrounding the Bakery location.
It's important to note that the protected territory granted in the Franchise Agreement cannot be unilaterally altered, and its continuation does not depend on specific sales, revenue volume, or market penetration. However, Cinnaholic retains the right to distribute products similar to those offered in Cinnaholic Bakeries through other channels, such as e-commerce, grocery stores, and kiosks, even within the franchisee's protected territory. Cinnaholic may also operate or allow others to operate Cinnaholic bakeries at non-traditional locations such as stadiums, universities, and shopping malls within the franchisee's territory.
Prospective Cinnaholic developers should carefully consider the implications of potentially needing to sign updated Franchise Agreements for each new location. They should discuss with Cinnaholic the possible changes that could occur and how those changes might affect their overall investment and business operations. Understanding the scope and limitations of the protected territory is also crucial for assessing the potential for competition within the designated area.