Under what circumstances would a Cinnabon franchisee be required to pay for insurance obtained by the franchisor?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee1, 5 | Amount | Date Due | Remarks |
|---|---|---|---|
| not exceed 110% of our or their actual costs and expenses. | |||
| Technology Fee | Our then-current fee, which may be based on a percentage of Net Sales, fixed fees, and/or usage fees. Currently, we do not collect this fee. | As incurred | We may require you to pay us, or a third party we designate, a Technology Fee to defray our costs of developing, implementing, upgrading, operating, maintaining, supporting, or providing any technology-related products, services, programs, systems, or platforms that we, in our sole discretion, deem appropriate. This fee may replace or supplement other technology-related fees in this table. The fee may be modified from time to time, but it will not exceed 110% of our or our affiliates' actual costs and expenses related to such products or services. |
| Purchasing Program Fee | A reasonable membership fee assessed by the Purchasing Program. | As incurred | If we designate or establish any purchasing and/or distribution cooperatives/ associations/ programs ("Purchasing Programs"), you must become a member and pay any membership fees assessed. We currently do not have any Purchasing Programs which require membership fees Any membership fees set by us or our affiliates charge will not exceed 110% of our or their actual costs and expenses. |
| Supply Chain Fee | The then-current fee. Currently, $0.31 to $0.58 per case purchased through certain Appointed Distributors (as defined in Item 8). | As incurred | We and/or our affiliate(s) collect this fee from certain Appointed Distributors from whom you may purchase products and services to offset expenses related to managing the supply chain. We may change this fee in any year by no more than the Allowed Adjustment. |
| Master Insurance Policy Fee | Currently not charged; we do not have an estimate at this time. | As incurred | We reserve the right to obtain a master insurance policy on behalf of the System for certain types of coverage and require you to pay all or a portion of your proportionate share of coverage under the master policy to us or our Approved Supplier. |
| Insurance | Amount of unpaid premiums and up to 110% of our actual costs and expenses. | On demand | Payable only if you fail to maintain required insurance coverage and we elect to obtain coverage for you. See Item 8. |
Source: Item 6 — OTHER FEES (FDD pages 31–45)
What This Means (2025 FDD)
According to Cinnabon's 2025 Franchise Disclosure Document, a franchisee may be required to pay for insurance obtained by the franchisor under specific circumstances. If a Cinnabon franchisee fails to maintain the required insurance coverage, Cinnabon has the option to obtain the necessary coverage on behalf of the franchisee.
In such a case, the franchisee is responsible for paying the amount of the unpaid premiums. Additionally, Cinnabon may charge the franchisee up to 110% of their actual costs and expenses incurred in obtaining the insurance coverage. This means that the franchisee would not only have to cover the cost of the insurance premiums but also potentially an additional charge to cover Cinnabon's administrative expenses.
This provision ensures that all Cinnabon locations maintain the necessary insurance coverage to protect the brand and its customers. It also serves as a financial disincentive for franchisees to allow their insurance coverage to lapse, as they could face additional costs beyond the standard premium. Franchisees should ensure they understand the required insurance coverage and maintain it diligently to avoid these potential expenses.