Can the Cinnaholic franchisor use payments received from suppliers without restriction?

According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic and its affiliates have the right to receive payments, discounts, or other forms of consideration from suppliers due to the suppliers' dealings with Cinnaholic franchisees. Cinnaholic is allowed to use all of these received amounts without any restrictions.

This means that Cinnaholic franchisees are required to purchase ingredients, products, supplies, furnishings, and equipment from suppliers that Cinnaholic designates or approves. Cinnaholic can designate these suppliers at any time and for any reason, and these suppliers can be Cinnaholic itself or an affiliate. If Cinnaholic designates itself as a supplier, it has the right to earn a profit on the items it supplies to franchisees.

Importantly, Cinnaholic is not obligated to provide franchisees with an accounting of these supplier payments or share any of the benefits derived from these payments with the franchisees. This arrangement is common in franchising, where franchisors often negotiate discounts or rebates with suppliers based on the collective purchasing power of the franchise system. However, the franchisor is not required to pass these savings on to the franchisees.

For a prospective Cinnaholic franchisee, this means that the cost of goods may not always reflect the lowest possible price, as Cinnaholic benefits from supplier payments. While this arrangement is disclosed, it's crucial for franchisees to factor this into their cost analysis and profitability projections. Franchisees should inquire about the designated suppliers and compare their pricing and quality to other potential suppliers to ensure they are receiving competitive value, even if they are unable to directly negotiate with or switch suppliers without Cinnaholic's approval.