If Cinnaholic reimburses me for defending their confidential information, what costs are covered?

According to Cinnaholic's 2025 Franchise Disclosure Document, while Cinnaholic is not required to participate in a franchisee's defense or indemnify them for damages or expenses if they are involved in legal proceedings related to Cinnaholic's confidential information, Cinnaholic may choose to reimburse the franchisee. If Cinnaholic does offer reimbursement, it covers the franchisee's liability and reasonable costs associated with defending Cinnaholic's confidential information and other information in which Cinnaholic claims common law rights and copyright protection.

This means that if a franchisee is sued for something involving Cinnaholic's confidential information (like the recipes, marketing strategies, or operational methods), Cinnaholic has the option, but not the obligation, to help cover the costs. These costs could include legal fees, court costs, and any settlements or judgments against the franchisee. However, Cinnaholic only covers "reasonable costs," which implies that the franchisor has discretion to determine what expenses are considered appropriate and eligible for reimbursement.

It is important for a prospective Cinnaholic franchisee to understand that this reimbursement is not guaranteed. Franchisees should clarify with Cinnaholic what specific types of costs would be considered "reasonable" and under what circumstances Cinnaholic would be likely to provide reimbursement. Franchisees should also consider obtaining their own insurance or legal advice to protect themselves in case of lawsuits involving confidential information, as reliance on Cinnaholic's discretionary reimbursement may not be sufficient.