What documentation is required for local advertising expenditures made by a Cinnaholic franchisee?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
opy of Franchisee's signed 1120 or 1120S tax form (including all supporting schedules) as filed with the Internal Revenue Service (or any forms which take the place of those forms), and all other federal, state and local sales and use and income tax reports Franchisee is required to file, all to be delivered within 30 days after filing;
- (v) A statement of local advertising expenditures made pursuant to Section 11.3 below for each calendar quarter and fiscal year to date, in a form satisfactory to Franchisor, along with invoices documenting such expenditures (if required by Franchisor), to be delivered within 15 days after the end of each calendar quarter;
- (vi) Insurance certificates upon the annual renewal of the policies and all health and safety inspection reports; and
- (vii)
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, franchisees must submit a statement of local advertising expenditures for each calendar quarter and fiscal year to date. This statement must be in a format that Cinnaholic finds satisfactory. Additionally, franchisees must provide invoices documenting these expenditures if Cinnaholic requires them. These documents are due within 15 days after the end of each calendar quarter. Failure to submit these reports by the deadline may result in a late submission fee of $100.00. All reports should be sent to the attention of Cinnaholic's franchise department.
This requirement ensures that Cinnaholic franchisees are adhering to the local advertising obligations outlined in the franchise agreement. Specifically, franchisees must spend a reasonable amount each calendar quarter on local market advertising, with a minimum of 2% of Gross Sales per calendar quarter. By requiring documentation, Cinnaholic can verify that franchisees are making the required advertising expenditures and that the funds are being used appropriately.
It is important to note that certain expenditures do not qualify as local advertising. These include incentive programs, costs of honoring coupons, food costs for sales promotions, salaries, contributions, donations, press parties, in-store fixtures or equipment, menus, serving guides and nutritional facts, yellow page advertising, and exterior or interior signage. Franchisees should be aware of these exclusions when planning their local advertising spend and preparing their quarterly reports.
For a prospective Cinnaholic franchisee, this means maintaining detailed records of all local advertising expenditures and being prepared to provide documentation to Cinnaholic on a quarterly basis. Understanding what qualifies as a valid advertising expense and adhering to the reporting deadlines are crucial for remaining in compliance with the franchise agreement and avoiding late fees.