Does the Cinnaholic franchise agreement confer any rights or remedies to individuals or entities who are not parties to the agreement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
eloper also agrees that it and all of its employees and agents will take appropriate steps to protect Franchisor's confidential information from any unauthorized disclosure, copying or use. At any time upon Franchisor's request, and in any event upon termination or expiration of this Agreement, Developer will immediately return any copies of documents where there are materials containing confidential information and will take appropriate steps to permanently delete and render unusable any confidential information stored electronically.
- 14.4. Personal Covenants of Certain Bound Parties. As a condition to the effectiveness of this Agreement, and at the time Developer delivers this signed Agreement to Franchisor, each Bound Party of Developer must sign and deliver to Franchisor the Personal Covenants attached hereto as Exhibit C (the "Personal Covenants"), agreeing to be bound personally by all the provisions of Sections 14.1, 14.2 and 14.3 hereof. If there are any changes in the identity of any such Bound Party while this Agreement is in effect, Developer must notify Franchisor promptly and make sure the new Bound Party signs and delivers to Franchisor the Personal Covenants.
- 14.5. Agreements by Other Third Parties. As a condition to Franchisor's execution of this Agreement, Developer, if requested by Franchisor, shall cause each of its management and supervisory employees and other employees to whom disclosures of confidential information are made to execute a noncompetition, nonsolicitation and/or nondisclosure agreement in the form(s) prescribed by Franchisor from time to time.
- 14.6. Reasonable Restrictive Covenants.
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to the 2025 Cinnaholic Franchise Disclosure Document, certain third parties may have obligations under the agreements. Specifically, the franchise agreement stipulates that certain individuals associated with the franchisee, referred to as "Bound Parties," must sign and deliver Personal Covenants to Cinnaholic, agreeing to be personally bound by specific provisions related to non-competition, non-solicitation, and confidentiality. This requirement is a condition for the franchise agreement to take effect. Additionally, Cinnaholic may request the franchisee to ensure that management, supervisory, and other employees who have access to confidential information execute non-competition, non-solicitation, and/or non-disclosure agreements. These agreements are to be in the form prescribed by Cinnaholic.
These stipulations mean that individuals beyond the franchisee entity can be legally bound by certain terms of the franchise agreement. This is a mechanism for Cinnaholic to protect its interests by ensuring that key individuals associated with the franchisee are directly accountable for upholding specific obligations, such as protecting confidential information and refraining from competitive activities. This is a fairly common practice in franchising, particularly when dealing with closely held businesses or when specific employees have access to sensitive business information.
Furthermore, the Internet Listing Agreement also involves third parties. Upon termination of the Franchise Agreement, the franchisee is obligated to direct Internet Service Providers, domain name registries, Internet search engines, and other listing agencies to transfer all of the franchisee's interest in Internet Web Sites and Listings to Cinnaholic. This ensures that Cinnaholic maintains control over the brand's online presence even after a franchise agreement ends. This transfer is facilitated by requiring the franchisee to instruct these third-party "Internet Companies" to execute documents and take actions necessary to effect the transfer.