Does Cinnaholic currently have any finalized supply arrangements negotiated with suppliers for the benefit of franchisees?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
We may, when appropriate, negotiate purchase arrangements, including price terms, with designated and approved suppliers on behalf of the System. Some of our current approved suppliers include Sysco Foods and Tom Tedrow Architects. We may negotiate supply arrangements with suppliers for the benefit of franchisees. While we are currently developing several such arrangements, none have yet been finalized. We have not currently, but we may in the future, negotiate supply arrangements with suppliers for the benefit of franchisees. There are no approved suppliers in which any of our officers own an interest. We have negotiated price terms with some suppliers. In the future, there may be various vendors and suppliers that contribute to the cost of the annual convention for CINNAHOLIC® franchise system (the "Convention"). Monies from vendors and suppliers that are used to pay for the cost of the Convention will not be revenue to us.
During the fiscal year ended December 31, 2024, neither we, nor our affiliates, received any revenues from required purchases and leases.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 21–25)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, while Cinnaholic may negotiate supply arrangements with suppliers for the benefit of franchisees in the future, none have been finalized as of the FDD publication date. Cinnaholic does negotiate price terms with some suppliers, and some current approved suppliers include Sysco Foods and Tom Tedrow Architects.
This means that as a Cinnaholic franchisee, you may not initially benefit from pre-negotiated supply arrangements that could lower your costs or simplify your supply chain. However, Cinnaholic retains the option to establish such arrangements in the future, which could potentially offer franchisees better pricing or more favorable terms with suppliers. It is important to note that Cinnaholic also has the right to receive payments or other benefits, such as rebates, discounts, and allowances, from authorized suppliers based on their dealings with franchisees. For the fiscal year ended December 31, 2024, Cinnaholic received $3,735 in rebates from Fun Express, $22,000 in rebates from Ventura Foods, and $6,523 in rebates from Saebert.
As a franchisee, you are generally required to purchase food products, supplies, ingredients, equipment, furnishings, employee uniforms, fixtures, inventory, paper products, and packaging from suppliers that Cinnaholic designates or approves. Cinnaholic estimates that purchases and leases from designated or approved suppliers represent 80% or more of the total cost of establishing a Cinnaholic bakery and approximately 90% of the total cost of operating the bakery. This highlights the importance of understanding Cinnaholic's supplier relationships and the potential impact on your operating expenses.
Prospective franchisees should inquire with Cinnaholic about the status of any ongoing negotiations for supply arrangements and the potential timeline for their implementation. Understanding the existing supplier relationships and the process for requesting approval of alternative suppliers is also crucial for managing costs and ensuring a smooth operation.