What is the 'Territory' granted to a Nothing Bundt Cakes franchisee?
Nothing_Bundt_Cakes Franchise · 2025 FDDAnswer from 2025 FDD Document
ou comply with our relocation criteria and find a new location approved by us within 30 days of the fire or casualty. If you relocate your Bakery without our prior written consent, we shall have the right immediately to terminate the Franchise Agreement.
We will grant you a protected area within which we will not open another Bakery under the Marks and System (the "Territory"), as identified in Data Sheet to the Franchise Agreement. The Territory's boundary around your Approved Location will depend on your market area, including population density, drive times, and similar factors. There is no set minimum or maximum radius. We do not guarantee a certain population density in your Territory. Depending on the location of your Approved Location and your specific market and circumstances, the radius will be measured in terms of miles or number of blocks from the Approved Location. However, if you operate in a ROFR Site (based upon our authorizing you to do so), your Territory might be limited to the physical footprint of the specific site/premises. Otherwise, your Territory will exclude all Non-Traditional Sites (as defined below) physically located within the Territory. There are no restrictions on our or our Affiliate's right to operate and grant others the right to operate Approved Locations at Non-Traditional Sites. Upon renewal of your Franchise Agreement, we
reserve the right to modify and/or reduce the size of your Territory to be consistent with our then-current criteria for determining the size of a franchisee's territory.
You will not receive an exclusive territory. Your limited territorial rights will not be exclusive in terms of marketing rights, delivery, or clientele. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. We have the right to open or license others the right to open a non-traditional site within the Territory, provided however, we will give you a right of first refusal to establish and operate a Bakery at any ROFR Site, which we define as any mall (indoor and outdoor) food courts, food halls, fairs, festivals, and locations or events designed for large gatherings. For this reason, your Territory is not deemed exclusive. (Section 4.7 of the Franchise Agreement).
Until your Bakery opens, we reserve the right to deliver and ship, and allow other system franchisees the right to deliver and ship, Products to customers (sometimes called "Guests") located within your Territory. However, subject to our reserved rights under the franchise agreement and our E-Commerce Program, once your Bakery opens, no franchisee may deliver or ship Products to Guests located in your Territory and all customer account information should be transferred to you upon your request. Your rights described in the preceding sentence will not apply, however, if you refuse or fail to fulfill e-commerce orders, fail to deliver goods or services meeting our standards and specifications, or are otherwise not in material compliance with your obligations under your franchise agreement. In such cases, we may allow a Bakery outside of your Territory to fulfill your orders without any compensation to you, reimburse the Guest for any unfulfilled order, provide gift certificates, or otherwise remedy the situation, and you will be responsible for all of our costs in doing so. You agree to pay us or our designated supplier the then-current E-Commerce Program fees associated with maintaining the Website or other platform and fulfilling Guest orders.
On the other hand, you may deliver and ship Products to Guests located outside of your Territory provided that the Guest is not located within the territory of another open System Bakery. If the Guest is located within a territory subsequently sold to another System franchisee, upon the opening of such Bakery, you must immediately cease delivering or shipping Products to such Guest and transfer all Guest account information upon request of the Bakery owner. Subject to Sections 1.3 and 1.4 of the Franchise Agreement, you cannot, by yourself, through any Guest, courier service, or other agent, knowingly deliver, sell or ship Products within any other open Bakery's territory, or a corporate territory which we or our affiliates own and operate. If you do, you must remit all Net Revenues earned from the sale directly to the franchisee that owns the Bakery whose territory includes the geographic area where the Products were delivered or shipped (or us or our affiliate if it is a corporate territory) and make a $500 contribution to the Production Fund per violation.
You may not advertise or promote your Bakery outside of your Territory without our written consent, which we may withhold or revoke at any time and for any reason.
Minimum Performance Criteria
Your Bakery must meet the following minimum annual Net Revenue requirements within the time frames specified below (the "Minimum Net Revenue Requirement"):
| Performance Period | Minimum Net Revenue Requirement |
|---|---|
| st Year of Operations | $450,000 |
| 1 | |
| nd Year of Operations | $500,000 |
| 2 |
| rd Year of Operations 3 | $550,000 |
|---|---|
| th Year of Operations | $600,000 |
| 4 | |
| th and Subsequent Years of Operation | $650,000 |
| 5 |
The first year of your performance will be pro-rated based on the date of the opening of your Bakery. For example, if your Bakery opens for business on May 1st, your required Minimum Net Revenue Requirement would be $450,000 divided by 12 months multiplied by 8 months of operations (May – December). Thereafter, your Minimum Net Revenue Requirement will be calculated based on your calendar year of operations. We will include revenues from the E-Commerce Program towards your Minimum Net Revenue Requirement in any performance period.
If you do not meet these Minimum Net Revenue Requirements, you must pay the 6% royalty on the difference between the actual Net Revenues and the Minimum Net Revenue Requirement. Additionally, if you do not meet these Minimum Net Revenue Requirements, you must provide us with documentation of your efforts toward the "10,000 Bites of Joy" program and other marketing efforts, including documentation of event dates, amount of cake provided, eClub sign-ups achieved and the like. While failure to meet these Minimum Net Revenue Requirements does not cause you to lose your limited territorial protection, we have the right to terminate your Franchise Agreement if you fail to meet the Minimum Net Revenue Requirement in any Performance Period.
Development Rights Rider
You may (if you qualify) develop and operate a number of Bakeries within a specific area (the "Development Area"). We and you will identify the Development Area in the Development Rights Rider before signing it. We base the Development Area's size primarily on the number of Bakeries you agree to develop, demographics, and site availability. We will determine the number of Bakeries you must develop, and the deadlines for development, to keep your development rights. We and you will then complete the schedule in the Development Rights Rider before signing it. Under the Development Rights Rider, we first must accept each new site you propose for each new Bakery. After we accept (and you secure lawful possession of) a proposed site, we also will determine the Territory for that Bakery. Our then-current standards for sites and territories will apply. We have the right to terminate the Development Rights Rider if you do not satisfy your development obligations.
Source: Item 12 — TERRITORY (FDD pages 52–58)
What This Means (2025 FDD)
According to Nothing Bundt Cakes' 2025 Franchise Disclosure Document, a franchisee will operate their bakery from an Approved Location. When signing the Franchise Agreement, the franchisee will also sign a Site Selection Addendum, which identifies a site selection territory and governs the site selection process.
The Territory's boundary around the Approved Location depends on market area factors such as population density and drive times, with no set minimum or maximum radius. However, if operating in a ROFR (Right of First Refusal) Site, the territory might be limited to the physical footprint of that site. Otherwise, the Territory will exclude all Non-Traditional Sites physically located within it. Nothing Bundt Cakes does not provide an exclusive territory, meaning franchisees may face competition from other franchisees, company-owned outlets, alternative distribution channels, or competitive brands.
Nothing Bundt Cakes retains several rights within the territory, including the right to operate or license bakeries at Non-Traditional Sites and to solicit National Accounts. They can also sell and distribute products through alternative channels like e-commerce, wholesale, supermarkets, and direct marketing, without compensating the franchisee. The franchisee is obligated to participate in Nothing Bundt Cakes' E-Commerce Program, fulfilling online orders within their territory. However, Nothing Bundt Cakes may require a franchisee to ship cakes outside of their territory.
The franchisee cannot advertise outside their territory without written consent and must cease delivering to customers in another franchisee's territory once their bakery opens, transferring all customer account information. If a franchisee delivers, sells, or ships products into another open bakery's territory, they must remit all net revenues from the sale to that franchisee and contribute $500 to the Production Fund per violation. Upon renewal of the Franchise Agreement, Nothing Bundt Cakes reserves the right to modify or reduce the size of the Territory to be consistent with their then-current criteria.