Does the Cinnaholic franchise agreement grant territorial protection to the franchisee?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.2. Territorial Protection. Franchisor will not establish for itself or grant a franchise to any other party to establish a Bakery within the territory specified on Exhibit A attached hereto (the "Franchise Territory"). Notwithstanding anything herein to the contrary, if any disagreement arises regarding the area comprising the Franchise Territory, then Franchisor's decision as to the definition of the Franchise Territory shall be final and binding. Except as expressly provided in the first sentence of this Section 3.2, Franchisee acknowledges that the franchise granted under this Agreement is non-exclusive and Franchisee has no territorial protection and Franchisee has no right to exclude, control or impose conditions on the location or development of other or future franchises under the Marks, or on any sales or distribution of products under the Marks or other business activities of Franchisor or any other party licensed to use the Marks.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to the 2025 Cinnaholic Franchise Disclosure Document, the franchise agreement grants limited territorial protection to the franchisee. Specifically, Cinnaholic will not establish or franchise another bakery within the territory specified in Exhibit A of the franchise agreement. However, if there is any disagreement regarding the boundaries of the franchise territory, Cinnaholic's decision is final.
Despite this limited protection, the franchise agreement emphasizes that the franchise is non-exclusive, and the franchisee has no right to control the development of other franchises or the sale of products under the Cinnaholic brand. Cinnaholic retains significant rights, including establishing other Cinnaholic bakeries outside the Franchise Territory, using other trademarks, selling products through various channels (including within the Franchise Territory), and establishing Cinnaholic franchises at destination locations, even within the franchisee's territory.
Furthermore, Cinnaholic can operate other types of bakeries under different marks, even in close proximity to the franchisee's bakery. The franchisee is allowed to provide catering and delivery services within a reasonable distance, not exceeding 10 miles from the Franchised Site, even outside the Franchise Territory, provided it's done via ground transportation. This means other Cinnaholic franchisees can also offer these services within the franchisee's territory. These stipulations significantly limit the scope of territorial protection a Cinnaholic franchisee receives.