What is the 'Allowed Adjustment' that limits changes to the Cinnabon late reporting fee?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee1, 5 | Amount | Date Due | Remarks |
|---|---|---|---|
| Obligation from you and (i) contribute it to the Ad Fund, (ii) conduct national, regional, or local advertising, (iii) spend it on local advertising, or (iv) contribute it to your Advertising Cooperative. | |||
| Promotions and Advertising Materials | Up to 110% of our or our affiliates' actual costs and expenses related to the goods you purchase from us or them. | As incurred | You will participate at your own cost in temporary or permanent promotional campaigns that we establish (e.g., limited time offers, gift cards, coupons, loyalty programs, customer relationship management, and other supplemental marketing programs), which may be applicable to the System as a whole or to specific advertising market areas, and promotional programs your Advertising Cooperative establishes. We may require or permit you to purchase items from us or our affiliates necessary to participate in such campaigns, such as counter cards posters, banners, signs, photographs, loyalty program rewards, give-away items, and gift cards. |
| Insufficient Funds Fee | Up to 110% of our or our affiliates' actual costs and expenses | On invoice | If we draft money from your account under our electronic funds transfer ("EFT") or draft system, and there are insufficient funds to cover the draft, we may charge this fee, which will include any bank return charges. This fee is in addition to interest on the amount due. |
| Interest | The lesser of 1.5% per month or the maximum legal interest rate | On invoice | You must pay us or our affiliates interest on any amounts past due to us or our affiliates. |
| Late Reporting Fee | Our then-current fee. Currently, $50 per week. | On invoice | You must pay this late fee if you fail to submit timely, complete and accurate reports, financial statements, tax returns, and statements of initial investment costs when due. We may change this fee in any year by no more than the Allowed Adjustment (as defined in Note 4). |
Source: Item 6 — OTHER FEES (FDD pages 31–45)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, the 'Allowed Adjustment' that limits changes to certain fees, including the late reporting fee, is defined in Note 4 of Item 6. The Allowed Adjustment in any calendar year will not exceed, at Cinnabon's option, either (a) 50% of the fee that is in effect at the start of the calendar year, or (b) the increase in the actual costs and expenses that Cinnabon or its affiliates incur to provide such goods or services to the franchisee.
For a prospective Cinnabon franchisee, this means that the late reporting fee, currently at $50 per week, could increase by a maximum of 50% in a given year, or by the amount of increased costs Cinnabon incurs. The actual increase could vary depending on which option Cinnabon chooses to implement.
This provision protects franchisees from drastic, unpredictable fee increases, while also allowing Cinnabon to adjust fees to account for rising operational costs. Franchisees should be aware of this potential for fee increases and factor it into their financial planning. It is also important to note that the 'Allowed Adjustment' applies to other fees as well, such as the Guest Relations Fee and the Non-compliance Fee, so franchisees should carefully review all fees outlined in Item 6 of the FDD.