Does Cinnaholic have an advertising fund?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
ost of such coaching will count toward Franchisee's required grand opening promotion expenditures required under this Section. FRANCHISEE UNDERSTANDS AND AGREES THAT THE MANDATORY GRAND OPENING PROCESS IS AN INTEGRAL PART OF STARTING THE FRANCHISED UNIT AND THAT FRANCHISEE MUST THEREFORE FAITHFULLY FOLLOW FRANCHISOR'S INSTRUCTIONS IN THIS REGARD.
11.2. Advertising Fund. In addition to all other amounts required to be paid hereunder, during the term hereof, Franchisee must pay to Franchisor, or such other entity designated by Franchisor, an amount based upon Gross Sales to be designated by Franchisor from time to time, in its sole discretion, provided such amount shall not exceed 2% of Gross Sales (the "Advertising Fee"), which amount shall be used by the Advertising Fund (as such term is hereinafter defined). The Advertising Fee shall be the same for all CINNAHOLIC® franchisees. Payment of the Advertising Fee shall be made on or before Tuesday of each week and be based upon Gross Sales of the Bakery for the preceding week. Advertising Fees shall be paid concurrently with the payment of the Royalty Fees.
The Advertising Fee will be expended for the benefit of Franchisor, Franchisee and all other franchisees or users of the CINNAHOLIC® for the production or purchase of such radio, television, print and/or other advertising materials or services as Franchisor deems necessary or appropriate, in its sole discretion, on a national, regional or local basis (the "Advertising Fund"). The expenditure of such funds for advertising is to be under the control of, and in the discretion of, Franchisor at all times, or such other entities designated by Franchisor. Franchisee understands and acknowledges that the Advertising Fund is intended to maximize and support general public recognition, brand identity, sales and patronage of CINNAHOLIC® Bakeries for the benefit of all CINNAHOLIC® Bakeries and that Franchisor undertakes no obligation to ensure that the Advertising Fund benefits each CINNAHOLIC® Bakery in proportion to its respective contributions. Franchisor agrees that all funds contributed to the Advertising Fund may be used to meet any and all costs (including, without limitation, reasonable salaries and overhead incurred by Franchisor) of maintaining, administering, directing and preparing national, regional or local advertising materials, programs and public relations activities including, without limitation, the costs of preparing and conducting television, radio, magazine, billboard, newspaper, direct response literature, direct mailings, brochures, collateral advertising material, implementing websites for Franchisor and/or its franchises, surveys of advertising effectiveness and other media programs and activities, employing advertising agencies to assist therewith and providing promotional brochures, decals and other marketing materials.
The Advertising Fund shall be established as a separate banking account and monies received shall be accounted for separately from Franchisor's other funds and shall not be used to defray any of Franchisor's general operating expenses, except for such reasonable salaries, administrative costs and overhead as Franchisor may incur in activities reasonably related to the administration or direction of the Advertising Fund and its advertising programs (including, without limitation, conducting market research, preparing advertising and promotional materials, collecting and accounting for contributions to the Advertising Fund, paying for the preparation and distribution of financial statements, legal and accounting fees and expenses, taxes, and other reasonable direct and indirect expenses incurred by Franchisor or its authorized representatives in connection with programs funded by the Advertising Fund). The Advertising Fund will not be Franchisor's asset. A financial statement of the operations of the Advertising Fund shall be prepared annually, and shall be made available to Franchisee upon request. Franchisor may spend in any fiscal year more or less than the aggregate contribution of all CINNAHOLIC® Bakeries to the Advertising Fund in that year, and the Advertising Fund may borrow from Franchisor or others to cover deficits or invest any surplus for future use.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic franchisees must pay an advertising fee to the franchisor or a designated entity. This fee is determined by the franchisor but cannot exceed 2% of gross sales. Payments are due weekly, concurrent with royalty fees, and are based on the previous week's gross sales. This advertising fee goes into the Advertising Fund.
The Advertising Fund is used for advertising materials and services deemed necessary by Cinnaholic, which may include radio, television, print, and other media, on a national, regional, or local level. Cinnaholic has control over how the Advertising Fund is spent and is not obligated to ensure that each Cinnaholic Bakery benefits proportionally to its contributions. The funds can cover costs related to maintaining, administering, and preparing advertising materials, including salaries and overhead incurred by Cinnaholic.
The Advertising Fund is established as a separate banking account, and its finances are kept separate from Cinnaholic's other funds. An annual financial statement of the Advertising Fund's operations is prepared and available to franchisees upon request. Cinnaholic may spend more or less than the aggregate contributions in any fiscal year and may borrow or invest funds to cover deficits or surpluses. Interest earned on the Advertising Fund is used to pay advertising costs. Cinnaholic may also require participation in local, regional, or national advertising cooperatives, but franchisees cannot be required to spend more than 2% of gross sales per annum in connection with any Advertising Cooperative. Payments to an Advertising Cooperative are credited against local advertising requirements.