How is the amount of the Cinnaholic Advertising Deficiency determined?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Local Advertising | A minimum of 2% of Gross Sales | As incurred | You must make local advertising expenditures as required by Section 11.3 of the Franchise Agreement. You may determine the form and media, subject to our approval before you make the expenditures. |
| Advertising Deficiency | Amount of Local Advertising Deficiency | Immediately upon demand | If you fail to make local advertising expenditures, we may do so on your behalf and you will reimburse us for those expenditures. |
Source: Item 6 — OTHER FEES (FDD pages 13–17)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the advertising deficiency is determined by the amount of local advertising that the franchisee fails to spend. Franchisees are required to spend a minimum of 2% of gross sales on local advertising. If a franchisee fails to meet this minimum spending requirement, Cinnaholic may step in and conduct advertising on the franchisee's behalf. The franchisee is then required to reimburse Cinnaholic for the expenditures made.
This means that if a Cinnaholic franchisee's gross sales are $500,000 in a year, they are expected to spend at least $10,000 (2% of $500,000) on local advertising initiatives. If the franchisee only spends $6,000, Cinnaholic could spend the remaining $4,000 on advertising for the location and then bill the franchisee for that $4,000.
This policy ensures that all Cinnaholic locations maintain a consistent level of local advertising, which benefits the brand as a whole. It also protects Cinnaholic by allowing them to take action if a franchisee is not fulfilling their advertising obligations. Franchisees should keep detailed records of their local advertising expenditures to avoid any discrepancies or disputes with Cinnaholic.