For Cinnaholic franchises in California, what condition has the Commissioner imposed regarding the collection of initial fees?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
The Department has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations. The Commissioner has imposed a fee deferral condition, which requires that we defer the collection of all initial fees from California franchisees until we have completed all of our pre-opening obligations and you are open for business. The payment of the development and initial fees attributable to a specific unit in your development schedule is deferred until that unit is open.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the California Commissioner has imposed a fee deferral condition for Cinnaholic franchises in California. This condition requires Cinnaholic to defer the collection of all initial fees from California franchisees. This deferral lasts until Cinnaholic has completed all of its pre-opening obligations and the franchisee is open for business.
This means that a new Cinnaholic franchisee in California will not have to pay the initial franchise fee until their specific unit is open. The payment of development and initial fees attributable to a specific unit in the franchisee's development schedule is deferred until that unit is open.
This condition is imposed because the Department has determined that Cinnaholic has not demonstrated that they are adequately capitalized and/or that they must rely on franchise fees to fund their operations. This provides a significant benefit and reduced risk for franchisees in California, as they are not required to pay the initial fees until the franchise is ready to open.