For Cinnaholic, if the Developer is not an individual, are the managers of the Developer bound by the non-competition agreement during the term?

According to Cinnaholic's 2025 Franchise Disclosure Document, if the Developer is not an individual, the non-competition agreement during the term extends to its shareholders, members, partners, and managers, as applicable, and their spouses. These individuals are collectively referred to as "Bound Parties." This means that these individuals are restricted from having any direct or indirect interest in a Competitive Business, regardless of location. They are also prohibited from performing services for a Competitive Business in any capacity, such as a director, officer, manager, employee, consultant, representative, or agent, regardless of location. A Competitive Business is defined as any business operating a bakery or food service that derives more than 50% of its revenue from cinnamon rolls.

This non-competition covenant is in effect during the term of the Market Development Agreement. After the agreement terminates or expires, or following a Transfer by the Developer, the non-competition restrictions continue for one year. During this one-year post-term period, the restrictions apply within a five-mile radius of any Cinnaholic Bakery. The FDD specifies that these restrictions are deemed reasonable and necessary to protect the Cinnaholic system and the interests of the franchisor and other franchisees.

To ensure compliance, each Bound Party must sign and deliver a Personal Covenants agreement, agreeing to be personally bound by the non-competition, non-solicitation, and confidentiality provisions. Cinnaholic also requires the Developer to ensure that any changes in the identity of a Bound Party are promptly communicated to Cinnaholic, and that the new Bound Party signs and delivers the Personal Covenants. Additionally, Cinnaholic may request the Developer to have its management, supervisory employees, and other employees with access to confidential information execute non-competition, non-solicitation, and/or non-disclosure agreements.

Cinnaholic emphasizes the difficulty of ascertaining monetary damages from a breach of these covenants and asserts that it would suffer irreparable harm. Consequently, Cinnaholic is entitled to injunctive relief to enforce these covenants, without needing to post a bond or security, which is waived by the Developer. This highlights the importance Cinnaholic places on protecting its business model, trade secrets, and franchisee relationships.