What triggers the insufficient funds fee for a Cinnabon franchise?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
keting Obligation may not collectively exceed 5% of your Net Sales. See Item 11 for what will count towards meeting your obligation. If you fail to make the minimum advertising expenditures, we may do so on your behalf and you must reimburse us for our expenses. We may also elect to collect all or a portion of the Local Marketing |
| 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). |
| Taxes and Other Payments | Our costs and expenses | Within 10 days after demand | You must pay us or our affiliates (i) all sales taxes, corporate taxes, and any similar taxes paid by us on your behalf, imposed on us, or required to be collected by us on account of products or services we furnish to you (through sale, lease, or otherwise) or on account of our collection of any fee related to the Franchise Agreement; (ii) all franchise or similar taxes, whether based on gross receipts, gross revenues, Royalty Fees, Advertising Contributions, or otherwise, imposed on, required to be collected by, or paid by us; (iii) all marketplace facilitator or similar taxes imposed |
| Type of Fee1, 5 | Amount | Date Due | Remarks |
| ----------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------- | ----------------------------- |
Source: Item 6 — OTHER FEES (FDD pages 31–45)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, an insufficient funds fee may be charged to franchisees under specific circumstances related to electronic fund transfers. If Cinnabon uses its electronic funds transfer (EFT) or draft system to withdraw money from a franchisee's account, and the account lacks sufficient funds to cover the draft, Cinnabon may impose an insufficient funds fee. This fee is designed to cover Cinnabon's or its affiliates' actual costs and expenses incurred due to the failed transaction. The fee will also include any bank return charges that Cinnabon incurs as a result of the insufficient funds.
This fee is in addition to any interest charged on the amount that is past due. The interest will be the lesser of 1.5% per month or the maximum legal interest rate. The insufficient funds fee is due on invoice.
For a prospective Cinnabon franchisee, this means maintaining adequate funds in the designated account for EFT withdrawals is crucial to avoid these additional charges. Franchisees should ensure they understand the timing and amounts of scheduled payments to Cinnabon to prevent overdrafts or insufficient funds situations. This policy is fairly standard in franchising, as franchisors rely on timely payments from franchisees and need to cover costs associated with failed payment attempts.