Is the Cinnaholic Advertising Fund established as a separate banking account?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
rtising Fund on an equal percentage basis with all franchised Bakeries. The Advertising Fund is established as a separate banking account and monies received from you will be accounted for separately from our other funds. There is no fiduciary or trust relationship created by our administering the Advertising Fund. We may cause the Advertising Fund to be incorporated or operated through a separate entity if we deem appropriate. (See Franchise Agreement, Section 11.2.) We anticipate all of our franchisees will contribute to the Advertising Fund, although there is no prohibition against us charging higher or lower rates for future franchisees. (See Franchise Agreement, Section 11.2.) We also may forgive, waive, settle, or compromise claims by or against the Advertising Fund. We may defer or reduce a franchisee's contribution. If we terminate the Advertising Fund, we will distribute all unused monies to the contributors in proportion to their respective contributions during a pre-determined period. For the 2024 fiscal year end, we collected $504,162.50 in the Ad Fund. We expended $444,137.79 in the following approximate proportions: Online Advertising ($89,825.20, or 20.22%), Social Media ($268,087.81, or 60.36%), Marketing Consultants ($61,800, or 13.91%), Creative ($12,846.00, or 2.89%), Publication Ads ($3,916.85, or .88%), Website ($6,030.88, or 1.36%), Administrative ($1,333.65, or .30%), and Miscellaneous ($297.40, or .08%). Fund expenses were more than Fund contributions during the year. $60,024.71 was collected in 2024, b
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 27–35)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the Advertising Fund is indeed established as a separate banking account. This means that the money franchisees contribute for advertising is kept distinct from Cinnaholic's other operating funds. As a franchisee, this offers some assurance that the advertising money is specifically earmarked for advertising and promotional activities. Cinnaholic franchisees are required to contribute 2% of Gross Sales to the Advertising Fund. All affiliate-owned Bakeries or Bakeries Cinnaholic owns also contribute to the Advertising Fund on an equal percentage basis with all franchised Bakeries.
While the funds are maintained separately, the FDD also clarifies that there is no fiduciary or trust relationship created by Cinnaholic administering the Advertising Fund. This is a common arrangement in franchising, where the franchisor has control over the fund's management. Cinnaholic retains the right to potentially incorporate the Advertising Fund or operate it through a separate entity if deemed appropriate.
For the 2024 fiscal year end, Cinnaholic collected $504,162.50 in the Ad Fund and expended $444,137.79. The largest expenditures were for Social Media ($268,087.81, or 60.36%) and Online Advertising ($89,825.20, or 20.22%). The remaining $60,024.71 was not expended and remains in the Fund for use in 2025 or later years. Although Cinnaholic does not intend to audit the Advertising Fund, they will make financial statements available or provide an unaudited accounting of how the Advertising Fund's monies were spent if requested in writing, no more than once each calendar year.