Is there an exception to the non-compete agreement for Cinnaholic if Bound Parties own securities in a Competitive Business?

According to Cinnaholic's 2025 Franchise Disclosure Document, there is an exception to the non-compete agreement regarding ownership of securities in a Competitive Business. Specifically, neither the franchisee nor other Bound Parties are prohibited from owning securities in a Competitive Business under certain conditions.

The exception applies if the securities are listed on a stock exchange or traded on the over-the-counter market. Additionally, the ownership must represent 5% or less of the number of shares of that class of securities which are issued and outstanding. This means a Cinnaholic franchisee or a Bound Party can invest in a publicly traded competitor, provided the investment remains below this threshold.

This exception acknowledges that small, passive investments in publicly traded companies do not typically pose a significant competitive threat. However, exceeding the 5% ownership threshold could be considered a violation of the non-compete agreement. Prospective franchisees should be aware of these limitations and ensure compliance to avoid potential legal issues with Cinnaholic.