As of December 29, 2024, what did Cinnabon's cash and cash equivalents consist of?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
Cash and cash equivalents includes highly liquid investments purchased with an original maturity of three months or less. As of December 29, 2024 and December 31, 2023, Cash and cash equivalents consists of funds on deposit with commercial banks and money market mutual fund accounts.
Restricted Cash and Cash Equivalents
Certain cash and money market mutual fund accounts are established in the name of a certain financial institution (the "Trustee") for the benefit of the Trustee and the holders of the Senior Notes (see Note 5), or have been pledged to the Trustee, and are restricted in their use. The Company holds restricted cash comprised of the following: (i) cash collections and cash reserves held by the Trustee to be used for payments of principal, interest, and commitment fees required for the Company's notes, and (ii) any other cash collections related to securitized franchising or licensing activities held in special-purpose, bankruptcy-remote subsidiaries.
Credit Risk
The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash and cash equivalents, and accounts receivable. The Company places its cash and cash equivalents and restricted cash and cash equivalents, which generally exceed federally insured limits, with high credit quality financial institutions or in money market funds that invest in U.S. Treasury bills, notes, or other obligations issued or guaranteed by the U.S. Government, its agencies, or instrumentalities, and repurchase agreements secured by such obligations or cash. The Company has not experienced any losses in such accounts.
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, as of December 29, 2024, the company's cash and cash equivalents consisted of funds on deposit with commercial banks and money market mutual fund accounts. Cash and cash equivalents include highly liquid investments purchased with an original maturity of three months or less.
Additionally, the FDD mentions "restricted cash and cash equivalents," which are funds held by a Trustee for the benefit of the Trustee and holders of Senior Notes, or pledged to the Trustee, and are restricted in their use. These restricted funds include cash collections and reserves held by the Trustee for payments of principal, interest, and commitment fees required for the company's notes, as well as cash collections related to securitized franchising or licensing activities held in special-purpose, bankruptcy-remote subsidiaries.
The company mitigates credit risk by placing its cash and cash equivalents, including restricted funds, with high-credit-quality financial institutions or in money market funds that invest in U.S. Treasury bills, notes, or other obligations issued or guaranteed by the U.S. Government. The FDD states that Cinnabon has not experienced any losses in such accounts.