Does Cinnabon derive revenue from franchisee purchases, and if so, how?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
- 9. Section 3.2.A. (Royalty Fee):
You are not required to pay a Royalty Fee. However, in the preparation and offering of Approved Products, you must purchase Proprietary Goods (as defined in Section 7.1.B. (Suppliers)) from our designated Approved Suppliers at the then-current price for Express Bakeries, which we or the supplier may increase or decrease from time to time. You understand that we will derive revenue (e.g. royalties) based on your purchase of the Proprietary Goods and include that revenue in the then-current prices that you pay for the Proprietary Goods. The revenue that we derive from Proprietary Goods includes a fee for
the use of our System and compensation for our operations, sourcing, and quality assurance functions.
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, while franchisees are not required to pay a royalty fee, Cinnabon does derive revenue from franchisee purchases. Specifically, franchisees operating Express Bakeries must purchase "Proprietary Goods" from Cinnabon's designated "Approved Suppliers." The prices for these goods can fluctuate, as Cinnabon or the supplier may increase or decrease them over time.
Cinnabon includes revenue derived from the purchase of Proprietary Goods in the prices franchisees pay. This revenue serves as compensation for the use of Cinnabon's system, as well as for Cinnabon's operations, sourcing, and quality assurance functions.
This arrangement means that a portion of the money a Cinnabon franchisee spends on supplies goes back to Cinnabon as a form of royalty or fee. Prospective franchisees should carefully consider the cost of these Proprietary Goods and how they might impact the profitability of their Cinnabon franchise.