Under the Cinnaholic Development Agreement, is a franchisee granted an exclusive territory to develop Bakeries?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Development Agreement. The Development Agreement will specify an Area of Responsibility within which you will focus your development efforts. Under the Development Agreement, you are not granted a territory, exclusive or otherwise, within which to develop your Bakery(s). Under the Development Agreement, we will determine or approve the location of future units and any territories for those units, and the then-current standards for sites and territories will apply. You may establish a Bakery at any location within your Area of Responsibility provided that we consent to the location, which may be granted or withheld in our sole discretion, the location is in a state where we are permitted to sell CINNAHOLIC® franchises, and the location is not located in another franchisee's franchise territory or area of responsibility. We will notify you of those areas which have been assigned to franchisees, either as exclusive territories or areas of responsibility. We do not intend to grant a large number of franchise territories, although we intend to grant other franchisees areas of responsibility within which they will concentrate their development efforts. An area of responsibility is a geographic territory within which we expect you to concentrate your development efforts. You will have no exclusive territorial rights, protected territory or other rights to exclude, control or impose conditions on the location or development of other or future franchises under the Marks or on our activities, except as may be provided in an applicable Franchise Agreement. If you fail to meet your development schedule, we may terminate your Development Agreement. You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
Source: Item 12 — TERRITORY (FDD pages 36–37)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the Development Agreement does not grant franchisees an exclusive territory to develop Bakeries. Instead, it specifies an Area of Responsibility where franchisees should focus their development efforts. Cinnaholic retains the authority to determine or approve the locations of future units and any territories associated with them, based on the company's current standards for sites and territories. Franchisees can propose a Bakery location within their Area of Responsibility, but Cinnaholic has the sole discretion to approve or deny the location. The location must be in a state where Cinnaholic is permitted to sell franchises and not within another franchisee's territory or area of responsibility. Cinnaholic will inform franchisees about areas already assigned to others, whether as exclusive territories or areas of responsibility.
Cinnaholic intends to grant areas of responsibility to franchisees, expecting them to concentrate their development efforts within those areas. However, franchisees will not have exclusive territorial rights to control or impose conditions on the location or development of other franchises, except as provided in the Franchise Agreement. Failure to meet the development schedule outlined in the Development Agreement may result in termination of the agreement. Franchisees should be aware that they will not receive an exclusive territory and may face competition from other franchisees, company-owned outlets, or other distribution channels and competitive brands controlled by Cinnaholic.
Under the Franchise Agreement, Cinnaholic franchisees will receive the right to operate a Cinnaholic Bakery only at an approved site. The Franchise Territory will be negotiated and defined in the Franchise Agreement. The size of the Franchise Territory can vary, ranging from just the approved site of the Bakery to an area within 1.5 miles around it. A Franchise Territory limited to the approved site will not have any exclusivity. Cinnaholic retains the right to operate or develop Cinnaholic Bakeries within a franchisee's territory at non-traditional locations like airports or malls. Franchisees are allowed to solicit customers and advertise anywhere they choose, with no restrictions preventing them from soliciting or advertising in another franchisee's territory. Franchisees may also deliver products for catering services within a reasonable distance, up to 10 miles, using ground transportation, even outside their Franchise Territory, without compensating the other franchisee.