How does the Cinnaholic franchise agreement define 'Gross Sales'?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees that, in addition to the payment of the Advertising Fee and any amounts required under Section 11.1 hereof, it will spend a reasonable amount each calendar quarter for local market advertising but in no event less than 2% of Gross Sales per calendar quarter.
The amount of advertising funds expended by Franchisee for individual local market advertising shall be determined by Franchisee, subject to the foregoing minimum requirement.
Local advertising expenditures shall not include incentive programs, including, without limitation, costs of honoring coupons, food costs incurred in honoring 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.
If Franchisee fails to make advertising expenditures in accordance with this Section, Franchisor shall have the right to spend an amount not to exceed 2% of the Gross Sales of the Bakery on local advertising on behalf of Franchisee, and Franchisee must reimburse Franchisor for such expenses.
Failure to comply with this Section shall be deemed a material breach of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
I am unable to provide a definition of 'Gross Sales' for Cinnaholic, according to the 2025 Franchise Disclosure Document. While the term 'Gross Sales' is mentioned in the context of local advertising requirements, the document does not explicitly define what constitutes 'Gross Sales.'
Specifically, Section 11.3 discusses local advertising and states that franchisees must spend a minimum of 2% of Gross Sales per calendar quarter on local market advertising. It also outlines what expenditures do not qualify as local advertising, such as incentive programs, salaries, and signage.
To fully understand how 'Gross Sales' is defined, a prospective Cinnaholic franchisee should ask the franchisor for the specific definition used in the franchise agreement. This will clarify what revenue streams are included in the calculation of Gross Sales, which is essential for determining advertising expenditure requirements and other financial obligations.