After termination or expiration of the Cinnaholic agreement, for how long are Bound Parties restricted from having an interest in a Competitive Business?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
rm of this Agreement (a) have any direct or indirect interest as a disclosed or beneficial owner in a Competitive Business (as defined below), regardless of location or (b) perform services as a director, officer, manager, employee, consultant, representative, agent, or otherwise for a Competitive Business, regardless of location.
- (ii) Post-Term Non-Competition. In addition to and not in limitation of any other restrictions on Franchisee contained herein, Franchisee 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 Franchisee, 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.
- (iii) General.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, both the franchisee and any Bound Parties are subject to a post-term non-compete agreement. This agreement states that for one year following the termination or expiration of the Franchise Agreement, or after a transfer by the franchisee, neither the franchisee nor any Bound Party can have a direct or indirect interest in a Competitive Business. This restriction applies if the Competitive Business is located or operating within a five-mile radius of any Cinnaholic bakery.
The term "Bound Party" includes the franchisee's spouse, and if the franchisee is not an individual, it includes its shareholders, members, partners, and managers, as well as their spouses. A "Competitive Business" is defined as any business that operates or franchises a bakery or food service that produces or sells baked goods, including cinnamon rolls, and derives more than 50% of its revenue from cinnamon roll sales (excluding other Cinnaholic bakeries).
This non-compete clause prevents former franchisees from leveraging Cinnaholic's confidential information and business model to compete against the brand shortly after leaving the system. The five-mile radius restriction is fairly standard in the franchise industry, as it aims to protect existing Cinnaholic locations from direct competition in their immediate trade areas. Franchisees should carefully consider these restrictions and how they might impact their future business opportunities before entering into an agreement with Cinnaholic.