For how long after the termination or expiration of the Cinnaholic agreement is the post-term non-competition covenant in effect?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
- (ii) Post-Term Non-Competition. In addition to and not in limitation of any other restrictions on Developer contained herein, Developer and the Bound Parties agree that they will not, for one year following the effective date of termination or expiration of this Agreement for any reason, or following the date of a Transfer by Developer, directly or indirectly, for and on behalf of itself, himself, herself or any other person or entity, (a) have any direct or indirect interest as a disclosed or beneficial owner in a Competitive Business or (b) perform services as a director, officer, manager, employee, consultant, representative, agent, or otherwise for a Competitive Business which, in either case, is located or operating within a five mile radius of any CINNAHOLIC® Bakery.
Source: Item 23 — RECEIPT (FDD pages 62–269)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the post-term non-competition covenant lasts for one year. Specifically, for one year following the effective date of termination or expiration of the Franchise Agreement, the franchisee and related parties are restricted from having a direct or indirect interest in a Competitive Business or performing services for one. This restriction applies to businesses located or operating within a five-mile radius of any Cinnaholic bakery.
This means that after the franchise agreement ends, a former Cinnaholic franchisee cannot immediately open a similar bakery or work for a competitor within a five-mile radius of any Cinnaholic location. This restriction is in place to protect Cinnaholic's market share and prevent former franchisees from using their knowledge of the Cinnaholic system to benefit a competing business.
The non-compete agreement is triggered either by the termination or expiration of the agreement or following a transfer by the developer. These restrictions are designed to protect Cinnaholic's interests by preventing franchisees from using confidential information or competing unfairly after they are no longer part of the Cinnaholic system. Franchisees should carefully consider these restrictions before entering into a franchise agreement, as they could limit their business opportunities after the agreement ends.