Is the Cinnaholic franchise granted to the Franchisee exclusive or non-exclusive?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
its and their officers, directors, shareholders, managers, members, partners, employees and agents; and (ix) Franchisee provides Franchisor with evidence that Franchisee has the right to remain in possession of the Franchised Site or to secure and develop a suitable alternative site acceptable to Franchisee for the renewal term.
3. FRANCHISED SITE AND TERRITORY
- 3.1. Franchised Site. The rights granted to Franchisee hereunder shall be non-exclusive and shall be restricted to the operation of a single CINNAHOLIC® Bakery to be located at the address and location set forth on Exhibit A attached hereto (the "Franchised Site"). During the term of this Agreement, the Franchised Site shall be used exclusively to operate a Bakery. In connection with the execution of any lease or sublease for the Franchised Site, Franchisee must execute, and cause the lessor and/or sublessor of the Franchised Site to execute, the Collateral Assignment of Lease attached to the Market Development Agreement entered into between Franchisor and Franchisee (the "Development Agreement"), in addition to complying with any other obligations and conditions contained in the Development Agreement relating to the lease or sublease of the Franchised Site and the development and construction of the Bakery. The rights granted to Franchisee are for the specific Franchised Site and cannot be transferred to any other location, except with Franchisor's prior written approval. After you sign a lease for the Franchised Site, you will pay us a Project Management Fee, currently $1,795, and we will assist you in developing your Bakery site but monitoring construction and build-out progress, attempting to identify potential bottlenecks, and otherwise help expedite pre-construction activities.
- 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.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the rights granted to a franchisee are non-exclusive. The franchisee is restricted to operating a single Cinnaholic bakery at the specific address outlined in Exhibit A.
While Cinnaholic offers territorial protection, specifying a 'Franchise Territory' in Exhibit A where the franchisor will not establish another bakery or franchise, this protection has limitations. The agreement explicitly states that the franchise is non-exclusive, and the franchisee does not have the right to control or impose conditions on other franchises, sales, or business activities of Cinnaholic or its licensees, except as expressly provided in the territorial protection clause.
Cinnaholic retains significant rights, including the ability to operate or license Cinnaholic franchises at destination locations like airports, stadiums, schools, hospitals, malls, and food courts, even if these are within the franchisee's territory. They can also sell products through other channels like grocery stores, the internet, and delivery services within the franchisee's territory, provided these sales do not originate from another Cinnaholic bakery in that territory. Furthermore, Cinnaholic can operate other types of bakeries under different marks, even in close proximity to the franchisee's location.
These stipulations mean that while a Cinnaholic franchisee receives a defined territory, Cinnaholic retains considerable freedom to operate and license other businesses, distribution channels, and even competing concepts within that same area. A prospective franchisee should carefully consider these non-exclusive aspects and how they might affect their bakery's potential market and revenue.