What are the consequences for late payments to Cinnaholic or insufficient funds?
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. Franchisee must pay any fines levied within ten days of written notice of the fine from Franchisor. If the fine is not paid within that time, Franchisor may cause an electronic funds transfer from Franchisee's bank account for the amount of any fine. Failure to pay any fine within ten days shall be a material default under this Agreement.
8. MODIFICATION AND IMPROVEMENTS TO THE CINNAHOLIC® SYSTEM
8.1. Modification by Franchisor. Franchisee recognizes and agrees that from time to time hereafter, Franchisor may change, modify or improve the CINNAHOLIC® System, including, without limitation, modifications to the Operations Manual, the menu and format, the processes and systems to support the business, the menu items and other product ingredients, the products offered for sale, the required equipment, the signage, the presentation and usage of the Marks, and the adoption and use of new, modified or substituted Marks or other proprietary materials. Franchisee agrees to accept, use and/or display for the purposes of this Agreement any such changes, modifications or improvements to the CINNAHOLIC® System, including, without limitation the adoption of new, modified or substituted Marks, as if they were part of the CINNAHOLIC® System as of the Effective Date, and Franchisee agrees to make such expenditures as such changes, modifications or improvements to the CINNAHOLIC® System may require.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, franchisees may face fines for non-compliance with the Operations Manual. Before a fine is imposed, Cinnaholic must provide one written notice of the non-compliance. Subsequent non-compliance with that specific provision allows Cinnaholic to impose a fine between $100 and $1000 per violation, per day, determined at Cinnaholic's discretion. Cinnaholic may provide guidance in the Operations Manual regarding fine amounts for specific acts of noncompliance. Franchisees must pay any levied fines within ten days of written notice from Cinnaholic. If a fine remains unpaid after ten days, Cinnaholic can initiate an electronic funds transfer from the franchisee's bank account for the fine amount. Failure to pay a fine within ten days constitutes a material default under the Franchise Agreement.
Furthermore, the FDD states that failure or repeated delays in making prompt payments for supplies, equipment, or other items, whether purchased from Cinnaholic or other suppliers, or defaults in payments due under any agreement related to the bakery's operation, can negatively impact the franchisee's credit rating and standing, which will be detrimental to Cinnaholic and other franchisees. Franchisees must pay all amounts owed for supplies, equipment, and other items used in connection with the bakery, as well as all payments due under any agreement related to the bakery's operation. Franchisees are required to notify Cinnaholic immediately if they become more than 90 days delinquent in payment of any of these obligations.
If a Cinnaholic franchisee becomes delinquent in their dues or other payments to the Advertising Cooperative or fails to abide by any formal agreements or authorized decisions of the Advertising Cooperative, such delinquency or failure will be considered a failure to participate in the Advertising Cooperative and a material breach of the Franchise Agreement. This could lead to further penalties or loss of the franchise.