Besides the increased royalty fee, what other surcharge can Cinnaholic impose for operational standard defaults?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
. Upon the expiration or termination of this Agreement for any reason, Franchisee must return all copies of the Operations Manual to Franchisor, and upon Franchisor's request, certify to Franchisor that Franchisee has not kept any copies in any medium. The Operations Manual is confidential, copyrighted and Franchisor's exclusive property.
Franchisor may impose fines for Franchisee's failure to comply with the Operations Manual. Before any fine may be imposed, Franchisor must first have given Franchisee one written notice of the non-compliance with the Operations Manual; thereafter, any further non-compliance with that specific provision of the Operations Manual shall allow the imposition of a fine. Fines shall be in the amount of $100 to $1000, per violation, per day, as determined in Franchisor's sole discretion. However, Franchisor may elect to provide guidance in the Operations Manual regarding the amount of fines it may levy for given acts of noncompliance.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic can impose fines on franchisees for failing to comply with the Operations Manual. Before imposing a fine, Cinnaholic must provide a written notice of non-compliance. Subsequent non-compliance with the same provision allows Cinnaholic to impose a fine ranging from $100 to $1000 per violation, per day. The specific amount is determined at Cinnaholic's discretion; however, the Operations Manual may provide guidance on fine amounts for specific violations.
Franchisees are required to pay any levied fines within ten days of receiving written notice from Cinnaholic. If a franchisee fails to pay the fine within this timeframe, Cinnaholic is authorized to electronically transfer the fine amount from the franchisee's bank account. Failure to pay the fine within ten days constitutes a material default under the Franchise Agreement.
This policy highlights the importance of adhering to Cinnaholic's operational standards as outlined in the Operations Manual. Prospective franchisees should carefully review the Operations Manual to understand the specific requirements and potential fines associated with non-compliance. Understanding these potential costs is crucial for budgeting and maintaining a successful Cinnaholic franchise.