For a Cinnaholic franchise, can the Advertising Fund be used to implement websites for the franchisor's franchises?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
The Advertising Fee will be expended for the benefit of Franchisor, Franchisee and all other franchisees or users of the CINNAHOLIC® for the production or purchase of such radio, television, print and/or other advertising materials or services as Franchisor deems necessary or appropriate, in its sole discretion, on a national, regional or local basis (the "Advertising Fund"). The expenditure of such funds for advertising is to be under the control of, and in the discretion of, Franchisor at all times, or such other entities designated by Franchisor. Franchisee understands and acknowledges that the Advertising Fund is intended to maximize and support general public recognition, brand identity, sales and patronage of CINNAHOLIC® Bakeries for the benefit of all CINNAHOLIC® Bakeries and that Franchisor undertakes no obligation to ensure that the Advertising Fund benefits each CINNAHOLIC® Bakery in proportion to its respective contributions. Franchisor agrees that all funds contributed to the Advertising Fund may be used to meet any and all costs (including, without limitation, reasonable salaries and overhead incurred by Franchisor) of maintaining, administering, directing and preparing national, regional or local advertising materials, programs and public relations activities including, without limitation, the costs of preparing and conducting television, radio, magazine, billboard, newspaper, direct response literature, direct mailings, brochures, collateral advertising material, implementing websites for Franchisor and/or its franchises, surveys of advertising effectiveness and other media programs and activities, employing advertising agencies to assist therewith and providing promotional brochures, decals and other marketing materials.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the Advertising Fund can be used to implement websites for both the franchisor and its franchisees. The franchisor has sole discretion over how the Advertising Fund is spent, and it is intended to maximize brand recognition and sales for all Cinnaholic bakeries.
The Advertising Fund is supported by franchisee contributions, which cannot exceed 2% of gross sales. These funds can cover a wide range of advertising and marketing expenses, including the costs associated with creating and maintaining websites. The franchisor is not obligated to ensure that each Cinnaholic bakery benefits from the Advertising Fund in direct proportion to its contributions.
This arrangement means that Cinnaholic franchisees contribute to a collective advertising pool that supports various marketing initiatives, including website development. While franchisees benefit from the overall brand promotion, they do not have direct control over how the funds are allocated. Franchisees should be aware that the franchisor has the authority to make decisions about advertising strategies and expenditures, including website implementation, for the benefit of the entire Cinnaholic system.