What sections of the Cinnaholic Franchise Agreement are the Bound Parties agreeing to be personally bound by in the Personal Covenants?

According to the 2025 Cinnaholic Franchise Disclosure Document, as a condition of the Franchise Agreement, each Bound Party of the franchisee must sign and deliver the Personal Covenants, agreeing to be personally bound by the provisions outlined in Sections 20.1, 20.2, and 20.3 of the agreement. These sections pertain to restrictive covenants.

Section 20.1 details the covenants not to compete, which include non-competition during the term of the agreement and post-term non-competition for one year following termination or expiration of the agreement, or after a transfer by the franchisee, within a five-mile radius of any Cinnaholic Bakery. Section 20.2 focuses on the non-solicitation of employees, preventing franchisees and Bound Parties from soliciting or disrupting the employment relationships between Cinnaholic and its employees or between other Cinnaholic franchisees and their employees, both during the agreement and for one year after its termination. Section 20.3 addresses trade secrets and confidential information, ensuring that franchisees and Bound Parties do not disclose or use Cinnaholic's proprietary information during the agreement and for five years after termination, with an indefinite restriction for information that constitutes a trade secret.

These personal covenants are significant because they extend the franchisee's obligations to other individuals associated with the franchisee, such as shareholders, members, partners, managers, and their spouses. This ensures that these individuals are also legally bound to protect Cinnaholic's interests, particularly concerning competition, employee solicitation, and confidential information. The franchisor can seek injunctive relief to enforce these covenants, without needing to post a bond or security, if these restrictions are violated.

Prospective franchisees should carefully review these sections and understand the implications for themselves and their Bound Parties. It is important to consider how these restrictions might affect their future business activities and personal opportunities, especially after the franchise agreement ends. Franchisees should also ensure that all Bound Parties are fully aware of these obligations before signing the Personal Covenants.