Is a Cinnaholic franchisee obligated to compensate another franchisee for soliciting customers from the other franchisee's territory?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
You may solicit customers and advertise your Bakery anywhere you choose.
There are no restrictions on you, any of our other franchisees, or us to prevent any soliciting or advertising in someone else's franchise territory.
No party is obligated to pay compensation to any other party for soliciting customers from the other franchisee's franchise territory.
In addition, you may deliver products from the Bakery within or without your Franchise Territory in connection with providing catering services within a reasonable distance from your Bakery, but not more than 10 miles, provided the deliveries are made by ground transportation.
Subject to this maximum mileage requirement, you may provide catering and delivery services in another franchisee's franchise territory without compensating the other franchisee, and other CINNAHOLIC® franchisees may provide the same services in your Franchise Territory without compensating you.
Source: Item 12 — TERRITORY (FDD pages 36–37)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, a franchisee is not obligated to compensate another franchisee for soliciting customers from their territory. The FDD states clearly that no party is required to pay compensation for soliciting customers in another franchisee's territory. This policy extends to advertising as well, meaning franchisees can market their Cinnaholic bakery anywhere they choose without restriction.
This aspect of the Cinnaholic franchise agreement fosters a competitive environment where franchisees are encouraged to actively seek customers, even outside their immediate territory. While this could lead to increased business and brand awareness, it also means franchisees must be prepared to compete with other Cinnaholic locations for customers. This open solicitation policy is not uncommon in the franchise industry, as many franchisors prioritize overall brand growth and customer acquisition over strict territorial protection.
However, Cinnaholic franchisees should be aware of the catering exception. While general solicitation is permitted, the FDD specifies that franchisees may deliver products for catering services within a reasonable distance, but not more than 10 miles, from their bakery using ground transportation. Subject to this mileage limit, franchisees can provide catering services in another franchisee's territory without needing to compensate them. This exception allows franchisees to tap into catering opportunities beyond their immediate area while setting a clear boundary to prevent overreach.
In summary, while Cinnaholic franchisees have the freedom to solicit customers and advertise anywhere, including other franchisees' territories, they do not have to compensate other franchisees for doing so. This policy promotes competition and brand visibility, but franchisees should be prepared to compete for customers and be mindful of the catering service limitations.