Under what condition are Bound Parties permitted to own securities in a Competitive Business without violating the non-compete agreement for Cinnaholic?

According to Cinnaholic's 2025 Franchise Disclosure Document, a Bound Party, which includes the franchisee, their spouse, and, if the franchisee is not an individual, its shareholders, members, partners, and managers and their spouses, may own securities in a Competitive Business without violating the non-compete agreement under specific conditions. A "Competitive Business" is defined as any business operating a bakery or food service that derives more than 50% of its revenue from cinnamon rolls.

Specifically, the Bound Parties are permitted to own securities in a Competitive Business if the securities are listed on a stock exchange or traded on the over-the-counter market. Additionally, their ownership must represent 5% or less of the number of shares of that class of securities which are issued and outstanding.

This exception to the non-compete agreement allows Cinnaholic franchisees and related parties to make minor investments in publicly traded companies that might be considered competitive without violating the franchise agreement. However, it strictly limits the extent of such investments to ensure that the franchisee's primary focus remains on the success of their Cinnaholic franchise and that they do not have significant influence or control over a competing business.