Can a Cinnaholic franchisee face competition from other channels of distribution or competitive brands that Cinnaholic controls?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
Under the Franchise Agreement, we and our affiliates have reserved the right to establish anywhere franchises and/or company-owned or affiliate-owned bakeries or outlets selling similar products and providing similar services (including within your Franchise Territory) under names and symbols other than the Marks, even if these bakeries or outlets are near your Bakery.
Nevertheless, as of the date of this Disclosure Document, we have no present plans to exercise any of these rights.
We also reserve the right to operate, for ourselves and our affiliates, businesses using the Marks and other marksto distribute products or offer services (including through the Internet, worldwide web, mail order, catalogs or other forms of distribution channels or methods) that may be similar to or different from those found in CINNAHOLIC® Bakeries, both within and outside your Franchise Territory, so long as we do not do so through the operation of a CINNAHOLIC® Bakery.
We also reserve the exclusive right to sell products identified with the Marks both within and outside your Franchise Territory through any distribution channels or methods (whether at retail or wholesale) including sales through catalogs, e-commerce, mail order, kiosks, mass merchandise, supermarkets and club stores, except through the operation of a CINNAHOLIC® Bakery, even if you sell these products at your Bakery.
As one example, we have the right to sell CINNAHOLIC® food products through a nationwide retail chain even if the chain has facilities located within your Franchise Territory.
On the other hand, you have no right to sell any products from any location other than your Bakery and you have no right to sell products through the Internet or worldwide web, through mail order or catalogs or through any other form of distribution channel or method.
You have no right to use the Marks in connection with any business other than a CINNAHOLIC® Bakery.
Other bakery or restaurant concepts owned now or in the future by us or our affiliates may be established in close proximity to your Bakery.
Source: Item 12 — TERRITORY (FDD pages 36–37)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a franchisee may face competition from various sources that Cinnaholic controls. Specifically, Cinnaholic franchisees may encounter competition from other franchisees, bakeries that Cinnaholic owns, or other channels of distribution or competitive brands that Cinnaholic controls. This means that even within a franchisee's designated territory, Cinnaholic retains the right to operate or authorize others to operate Cinnaholic bakeries in non-traditional locations like airports or malls.
Cinnaholic also reserves the right to sell products identified with their marks through various distribution channels, including retail, wholesale, catalogs, e-commerce, mail order, kiosks, mass merchandise, supermarkets, and club stores, even within a franchisee's territory. As an example, Cinnaholic retains the right to sell Cinnaholic food products through a nationwide retail chain, even if that chain has facilities within a franchisee's territory. However, the franchisee is restricted from selling products from any location other than their bakery and cannot sell products through the internet, mail order, or any other distribution channel.
While Cinnaholic states that as of the date of the 2025 Disclosure Document, they have no present plans to establish franchises or company-owned bakeries selling similar products under different names and symbols within a franchisee's territory, they reserve the right to do so. This clause allows Cinnaholic and its affiliates to establish other bakery or restaurant concepts in close proximity to a franchisee's Cinnaholic Bakery. These competitive outlets could operate under different brand names, potentially drawing customers away from the franchisee's location.
These stipulations highlight the importance of carefully evaluating the market and potential competition before investing in a Cinnaholic franchise. While franchisees are granted a territory, it is not an exclusive one, and Cinnaholic retains significant control over distribution channels and the potential for competition within that territory. Prospective franchisees should consider these factors and conduct thorough due diligence to assess the potential impact on their investment.