Does the Royalty Fee for Cinnabon change based on the franchisee's gross sales?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee1, 5 | Amount | Date Due | Remarks |
|---|---|---|---|
| Branded Bakeries): Currently, 2.5% of Net Sales Auntie Anne's Co Branded Bakeries in Other Locations: Currently, 2.5% of Net Sales attributed to Cinnabon and 2% of Net Sales attributed to Auntie Anne's Bakeries in Streetside Locations: Currently, 3% of Net Sales Swirl Bakeries (any location): Currently, 3% of Net Sales Express Bakeries in a Schlotzsky's: Not charged | You must contribute the Advertising Contribution to the Ad Fund (as defined in Item 11). For all Bakeries, except Express Bakeries in a Schlotzsky's, we may increase the Advertising Contribution at any time by notice to franchisees. However, your required Advertising Contribution and Local Marketing Obligation (as defined below) may not collectively exceed 5% of your Net Sales. This table indicates the current Advertising Contributions and already-announced scheduled increases. For Co-Branded Bakeries, we will collect the Advertising Contribution based on the portion of Net Sales attributable to products that we and Co Branded Franchisor have agreed to credit to the Cinnabon side of the Co-Branded Bakery, and the Co-Branded Franchisor will collect a separate advertising contribution (as specified in its Disclosure Document) based on the portion of Net Sales attributable to products that we and the Co Branded Franchisor have agreed to credit to the Co-Branded Franchise's side of the Co-Branded Bakery. |
Source: Item 6 — OTHER FEES (FDD pages 31–45)
What This Means (2025 FDD)
According to the 2025 Cinnabon FDD, the royalty fee structure varies depending on the type and location of the bakery. For Branded Bakeries, the royalty fee is currently 2.5% of Net Sales. Auntie Anne's Co-Branded Bakeries in Other Locations also have a 2.5% royalty fee on Net Sales attributed to Cinnabon. Bakeries in Streetside Locations and Swirl Bakeries (at any location) pay a royalty fee of 3% of Net Sales. Express Bakeries located within a Schlotzsky's restaurant are not charged a royalty fee.
This means that a Cinnabon franchisee's royalty obligations are directly tied to their gross sales (Net Sales) and the specific type of Cinnabon bakery they operate. Higher sales will result in higher royalty payments, while lower sales will result in lower royalty payments. The different percentages for different locations also indicate that Cinnabon tailors its fees based on the expected revenue and operational characteristics of each type of outlet.
For a prospective franchisee, it's crucial to understand which royalty structure applies to their specific location type, as this will directly impact their profitability. The absence of royalty fees for Express Bakeries in Schlotzsky's could be an attractive option for some, while the higher 3% fee for Streetside and Swirl Bakeries needs to be factored into the financial projections. Franchisees should also be aware that these percentages are current rates, implying that Cinnabon could potentially adjust them in the future, although the FDD does not specify any mechanism for doing so.
It is also important to note the distinction between Net Sales and gross sales. Net Sales is typically gross sales less certain deductions like discounts, returns, and sales taxes. Franchisees should clarify with Cinnabon exactly what constitutes Net Sales to accurately calculate their royalty obligations.