Who must sign the Personal Covenants attached to the Franchise Agreement and Development Agreement for a Cinnaholic franchise?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Your spouse, and if you are not an individual, your shareholders, members, partners and managers, as applicable, and their spouses, must sign the Personal Covenants attached to the Franchise Agreement as Exhibit B and the Development Agreement as Exhibit C requiring them to comply with the confidentiality provisions of the Franchise Agreement and the Development Agreement, refrain from engaging in competitive businesses, and refrain from soliciting our employees and the employees of other CINNAHOLIC® franchisees. We have the right to require your other employees who have access to our confidential information to sign a noncompetition, non-solicitation and/or nondisclosure agreement in the form(s) prescribed by us periodically. We have the right to take legal action against you if there has been an unauthorized use of our confidential information or trade secrets through you or your employees.
Source: Item 14 — PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION (FDD pages 39–40)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the Personal Covenants attached to the Franchise Agreement and Development Agreement must be signed by specific individuals to ensure compliance with confidentiality, non-competition, and non-solicitation provisions. If the franchisee is an individual, their spouse must sign these covenants. If the franchisee is not an individual, such as a corporation or partnership, then the shareholders, members, partners, and managers, as applicable, along with their spouses, are required to sign. These Personal Covenants are attached as Exhibit B to the Franchise Agreement and as Exhibit C to the Development Agreement.
The requirement for these individuals to sign the Personal Covenants is to ensure that all parties with a significant interest in the Cinnaholic franchise are bound by the terms that protect Cinnaholic's confidential information and prevent unfair competition. This is a common practice in franchising to safeguard the franchisor's business model and proprietary information. By including spouses, Cinnaholic aims to prevent individuals from circumventing these covenants through their partners.
This requirement has significant implications for prospective Cinnaholic franchisees. Individuals entering into a franchise agreement must ensure their spouses are willing to sign these covenants, as refusal could potentially prevent the franchise agreement from proceeding. Similarly, if the franchisee is a business entity, the involvement of multiple individuals (shareholders, members, partners, and managers) and their spouses adds complexity to the agreement process. Franchisees should carefully review these covenants with legal counsel to fully understand their obligations and potential liabilities.
Cinnaholic also retains the right to require other employees who have access to confidential information to sign non-competition, non-solicitation, and/or non-disclosure agreements. This allows Cinnaholic to further protect its interests by ensuring that those with access to sensitive information are legally bound to maintain its confidentiality and refrain from actions that could harm the franchise system. Franchisees should be prepared to implement such agreements with their employees as directed by Cinnaholic.