For a Cinnaholic franchise, are the monies received for the Advertising Fund accounted for separately from the franchisor's other funds?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
The Advertising Fund shall be established as a separate banking account and monies received shall be accounted for separately from Franchisor's other funds and shall not be used to defray any of Franchisor's general operating expenses, except for such reasonable salaries, administrative costs and overhead as Franchisor may incur in activities reasonably related to the administration or direction of the Advertising Fund and its advertising programs (including, without limitation, conducting market research, preparing advertising and promotional materials, collecting and accounting for contributions to the Advertising Fund, paying for the preparation and distribution of financial statements, legal and accounting fees and expenses, taxes, and other reasonable direct and indirect expenses incurred by Franchisor or its authorized representatives in connection with programs funded by the Advertising Fund).
The Advertising Fund will not be Franchisor's asset.
A financial statement of the operations of the Advertising Fund shall be prepared annually, and shall be made available to Franchisee upon request.
Franchisor may spend in any fiscal year more or less than the aggregate contribution of all CINNAHOLIC® Bakeries to the Advertising Fund in that year, and the Advertising Fund may borrow from Franchisor or others to cover deficits or invest any surplus for future use.
Any lender loaning money to the Advertising Fund shall receive interest at a reasonable rate.
All interest earned on monies contributed to the Advertising Fund will be used to pay advertising costs before other assets of the Advertising Fund are expended.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the Advertising Fund must be established as a separate banking account. The monies received for the Advertising Fund will be accounted for separately from Cinnaholic's other funds. These advertising funds will not be considered an asset of Cinnaholic.
Cinnaholic can use the advertising funds to cover reasonable salaries, administrative costs, and overhead related to administering the Advertising Fund and its advertising programs. This includes activities like market research, preparing advertising materials, collecting contributions, and covering financial statement preparation, legal and accounting fees, taxes, and other direct and indirect expenses.
A financial statement of the Advertising Fund's operations will be prepared annually and made available to Cinnaholic franchisees upon request. Cinnaholic has the right to spend more or less than the total contributions from all Cinnaholic bakeries in any given year. The Advertising Fund can also borrow from Cinnaholic or others to cover deficits or invest any surplus for future use. Any lender loaning money to the Advertising Fund will receive interest at a reasonable rate. All interest earned on the Advertising Fund will be used to pay advertising costs before other assets of the Advertising Fund are used.