For a Cinnaholic franchise, can the Advertising Fund be used to provide decals?
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 provide decals. Franchisees are required to pay an Advertising Fee, which cannot exceed 2% of gross sales. This fee is used for advertising materials and services deemed necessary by Cinnaholic, including providing promotional brochures, decals, and other marketing materials. The purpose of the Advertising Fund is to maximize brand recognition and sales for all Cinnaholic bakeries.
Cinnaholic maintains control over the expenditure of the Advertising Fund, and franchisees acknowledge that the fund may not benefit each bakery in direct proportion to its contributions. The funds can cover costs associated with creating advertising materials, running marketing programs, and public relations activities. This includes the costs of preparing materials for television, radio, magazines, billboards, newspapers, direct response literature, direct mailings, brochures, and websites.
The Advertising Fund is established as a separate banking account, and its monies are accounted for separately from Cinnaholic's other funds. While the funds cannot be used for Cinnaholic's general operating expenses, they can cover reasonable salaries, administrative costs, and overhead related to administering the Advertising Fund and its programs. A financial statement of the Advertising Fund's operations is prepared annually and made available to franchisees upon request.
Franchisees are also required to participate in any promotion, marketing, or advertising campaigns created by the Advertising Fund. Additionally, franchisees must spend a reasonable amount each calendar quarter for local market advertising, but no less than 2% of gross sales per calendar quarter. This local advertising expenditure does not include incentive programs, coupons, food costs, salaries, donations, or signage.