Does Cinnaholic reserve the right to establish franchises or company-owned bakeries under different names within a franchisee's territory?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
ng the other franchisee, and other CINNAHOLIC® franchisees may provide the same services in your Franchise Territory without compensating you. You may not ship products within or without your Franchise Territory. 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. We have the right to engage in any other activities not expressly prohibited in the Franchise Agreement. You may face competition from other franchisees, from Bakeries that we own, or from other channels of distribution or competitive brands that we control.
Source: Item 12 — TERRITORY (FDD pages 36–37)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic retains the right to establish franchises, company-owned bakeries, or affiliate-owned bakeries that sell similar products and services under different names and symbols, even within a franchisee's territory. This means that a Cinnaholic franchisee could potentially face direct competition from other outlets selling similar items under a different brand, which Cinnaholic or its affiliates own. While Cinnaholic states that they have no current plans to exercise this right, the possibility remains.
This reservation of rights extends beyond physical locations. Cinnaholic also reserves the right to operate businesses using the Cinnaholic marks or other marks to distribute products or offer services through various channels, including the internet, worldwide web, mail order, catalogs, or other distribution methods, both within and outside a franchisee's territory. The only restriction is that Cinnaholic cannot do so through the operation of a Cinnaholic Bakery. Furthermore, Cinnaholic has the exclusive right to sell products identified with the Cinnaholic marks through any distribution channels, such as retail, wholesale, catalogs, e-commerce, mail order, kiosks, mass merchandise, supermarkets, and club stores, even if the franchisee sells these products at their bakery.
For a prospective franchisee, this lack of territorial exclusivity and the potential for competition from Cinnaholic or its affiliates through various channels is a significant consideration. The franchisee has no right to sell products from any location other than their bakery and cannot sell products through the internet, mail order, or any other distribution channel. The franchisee is also prohibited from using the Cinnaholic marks in connection with any business other than a Cinnaholic Bakery. These terms highlight the importance of carefully evaluating the market conditions and potential competition before investing in a Cinnaholic franchise.
Cinnaholic also emphasizes that franchisees may face competition from other franchisees, from bakeries that Cinnaholic owns, or from other channels of distribution or competitive brands that Cinnaholic controls. The FDD also states that other bakery or restaurant concepts owned now or in the future by Cinnaholic or its affiliates may be established in close proximity to a franchisee's Cinnaholic Bakery. These factors underscore the competitive landscape that Cinnaholic franchisees may encounter and the limited control they have over market conditions within their territory.