How does the Cinnabon franchisor's right to approve suppliers (Item 8) relate to the franchisee's obligations regarding purchasing (Item 9)?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
7. GOODS AND SERVICES
7.1 Purchases.
- A.
Goods You Purchase.
We have the right to require that Approved Products, other products, Proprietary Ingredients, supplies (including chemicals), furniture, fixtures, equipment, and services (collectively, "Goods") that you purchase for resale or purchase or lease for use in your Franchised Business: (i) meet specifications that we establish from time to time; (ii) be a specific brand, kind, or model; (iii) be purchased or leased only from Approved Suppliers; (iv) be purchased or leased only from a single source that we designate (which may include us or our affiliates or a buying cooperative organized by us or our affiliates); and/or (v) be purchased as part of a purchasing program, arrangement, or contract that we negotiate or specify.
To the extent that we establish specifications, require approval of Suppliers, or designate Approved Suppliers for particular Goods, we will publish our requirements in the Manuals or otherwise in writing.
- B.
Suppliers.
You must purchase all of your requirements of Proprietary Ingredients, Proprietary Products, and proprietary uniforms, signs, menu boards, smallwares, materials, supplies, paper goods, equipment, and packaging (collectively, the "Proprietary Goods") from us, our affiliates, or our designated Approved Suppliers.
For all other Goods, we may require you to purchase such Goods from any Approved Suppliers or from particular Approved Suppliers, or we may permit you to purchase such Goods from any Supplier capable of providing Goods that meet our minimum Standards (to the extent we have specified Standards for such Goods).
If we sell Goods directly to you, we will do so at the same price that we charge similarly-situated franchisees.
If you are in default under this Agreement, then any obligations we and our Approved Suppliers may have to sell you Goods may be suspended in our sole discretion; and you will not, as a result, have a defense at law or equity based on impossibility of your performance or any claim against us or our Approved Suppliers.
If we or our Approved Suppliers are unable to supply you with the quantity and type of Goods you request, we will exert reasonable commercial efforts to allocate, or to cause our Approved Suppliers to allocate, the Goods available on an equitable basis among the Businesses that seek to purchase Goods.
You acknowledge that we, our affiliates, and our Approved Suppliers will not be liable if we, our affiliates, or our Approved Suppliers are unable to fulfill your requests.
- C.
Revenue from Purchases.
You acknowledge and agree that we and/or our affiliates may derive revenue based on your purchases and leases, including from charging you for Goods we or our affiliates provide to you and from promotional allowances, volume discounts, and other payments made to us by manufacturers, Suppliers, or third parties.
If we, our affiliates, or third parties acting under our direction arrange for manufacturers to sell the Goods directly to our Approved Suppliers to then sell them to you, then we or our affiliates will have the right to receive compensation or other consideration from the manufacturers, Approved Suppliers, and/or such third parties for these sales.
We and our affiliates may use all amounts received from manufacturers, Suppliers, or third parties, whether or not based on your or other franchisees' actual or prospective dealings with them, without restriction for any purposes we or our affiliates deem appropriate.
- 7.2 Approved Products.
You may offer in the Franchised Business to customers only the Approved Products that we have approved in writing.
You must produce and sell all Approved Products we specify, including all menu items and other products and services that we require you to sell, as stated in the Manuals or otherwise, which are all part of the System.
We may change these specifications periodically, and we may designate specific Approved Products as optional or mandatory.
You must offer all Approved Products that we designate as mandatory.
What This Means (2025 FDD)
According to the 2025 Cinnabon Franchise Disclosure Document, Item 8 and Item 23 (Receipts) outline the relationship between Cinnabon's right to approve suppliers and the franchisee's purchasing obligations. Cinnabon has the right to require that franchisees purchase or lease specific goods, including approved products, proprietary ingredients, supplies, furniture, fixtures, equipment, and services, that meet the franchisor's specifications. These goods must be purchased or leased only from approved suppliers, a single designated source, or as part of a purchasing program specified by Cinnabon. This ensures uniformity and quality control across all Cinnabon locations.
Cinnabon requires franchisees to purchase all proprietary goods from Cinnabon, its affiliates, or designated approved suppliers. For all other goods, Cinnabon may require franchisees to purchase from approved suppliers or permit them to purchase from any supplier capable of meeting Cinnabon's minimum standards. If Cinnabon sells goods directly to franchisees, it will do so at the same price charged to similarly situated franchisees. This system allows Cinnabon to maintain standards while potentially offering some flexibility in sourcing non-proprietary items.
Cinnabon also benefits financially from these purchasing arrangements. Cinnabon and its affiliates may receive revenue based on franchisee purchases and leases, including charges for goods provided, promotional allowances, volume discounts, and other payments from manufacturers, suppliers, or third parties. These revenues are not restricted and can be used for any purpose Cinnabon deems appropriate. This creates a potential incentive for Cinnabon to negotiate favorable terms with suppliers, which could benefit franchisees through lower costs or higher quality products, but also means Cinnabon profits from franchisee purchases.
If Cinnabon or its approved suppliers are unable to supply the requested quantity and type of goods, they will make reasonable commercial efforts to allocate the available goods equitably among the businesses seeking to purchase them. However, Cinnabon, its affiliates, and approved suppliers will not be liable if they are unable to fulfill franchisee requests. Franchisees are obligated to offer only approved products that Cinnabon has approved in writing, including all mandatory menu items and other products and services specified in the manuals. Cinnabon may change these specifications periodically and designate specific approved products as optional or mandatory, ensuring franchisees stay aligned with the brand's offerings and standards.