Is the Cinnaholic franchisor required to share supplier payments with franchisees?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor and its affiliates may receive payments, discounts or other consideration from suppliers in consideration of such suppliers' dealings with Franchisee and/or the system of CINNAHOLIC® franchisees, and may use all amounts received by it without restriction.
Franchisor is not required to give Franchisee an accounting of supplier payments or to share the benefit of supplier payments with Franchisee or other CINNAHOLIC® franchisees.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic is not required to share any payments it receives from suppliers with its franchisees. The document states that Cinnaholic and its affiliates may receive payments, discounts, or other consideration from suppliers for the suppliers' dealings with franchisees or the Cinnaholic system. Cinnaholic is allowed to use these amounts without any restrictions.
Specifically, Cinnaholic is not obligated to provide franchisees with an accounting of these supplier payments or share any of the benefits derived from them. This means that even if Cinnaholic negotiates favorable terms or receives rebates from suppliers based on the collective purchasing power of the franchise system, the individual franchisees are not entitled to a portion of those benefits.
This arrangement is fairly common in franchising, where franchisors often negotiate with suppliers on behalf of the entire system and may receive compensation for these arrangements. While this can potentially lower costs for the system as a whole, individual franchisees do not have a direct claim to any of the payments or discounts Cinnaholic receives.