How does Cinnaholic collect the Royalty Fee?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
nitial fees.
ITEM 6 OTHER FEES
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee | 5% of Gross Sales unless you are in default for failure to maintain standards | Every Tuesday for the preceding week's Gross Sales | We will debit your bank account for the Royalty Fee due. See Notes 2 and 7. |
| Advertising Fund Fee | 2% of Gross Sales | Same as Royalty Fee | See Item 11 and Note 7. |
| Advertising Cooperatives | May not exceed 2% of Gross Sales. See Note 3 | Same as Royalty Fee or as designated by your cooperative | See Item 11 and Notes 3 and 7. |
Source: Item 6 — OTHER FEES (FDD pages 13–17)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the royalty fee is collected via automated bank draft. The standard royalty fee is 5% of gross sales, unless the franchisee is in default for failure to maintain standards. The royalty fee is due every Tuesday for the preceding week's gross sales.
Cinnaholic requires franchisees to sign an electronic transfer of funds authorization for their bank account to ensure timely payment of royalty and advertising fees, as well as advertising cooperative contributions. This means that Cinnaholic will automatically debit the franchisee's bank account for the amount due each week.
This method of payment is common in franchising, as it ensures that the franchisor receives the fees owed in a timely and consistent manner. However, it is important for franchisees to carefully manage their cash flow to ensure that they have sufficient funds in their account to cover the royalty payments each week. Franchisees should also be aware that if they are in default of the franchise agreement for failure to meet minimum operational standards, Cinnaholic can increase the royalty to 10% of Gross Sales and charge an additional $250 each week until the deficiencies are rectified.