What does the FTC's Franchise Rule permit Cinnaholic to do regarding financial performance representations?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
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ITEM 18 PUBLIC FIGURES
We do not use any public figures to promote our franchise.
ITEM 19 FINANCIAL PERFORMANCE REPRESENTATIONS
The FTC's Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the Disclosure Document. Financial performance information that differs from that included in Item 19 may be given only if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about performance at a particular location or under particular circumstances.
As of December 31, 2024, there were a total of 82 open and operating Cinnaholic franchised units. Of the 82 units, 67 of the Cinnaholic units were open and operating the full twelve months of 2024. 15 units opened in 2024, and because of this, they were not open and operating for the full twelve months.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 50–55)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the FTC's Franchise Rule allows Cinnaholic to provide information about the actual or potential financial performance of its franchised and/or company-owned outlets, provided there is a reasonable basis for the information and it is included in the Disclosure Document. This means Cinnaholic can share data about how existing locations are performing to give potential franchisees an idea of what they might expect.
However, Cinnaholic can only give financial performance information that differs from what is included in Item 19 of the FDD under specific conditions. These conditions are that Cinnaholic provides the actual records of an existing outlet the prospective franchisee is considering buying, or Cinnaholic supplements the information in Item 19 with additional details, such as performance data for a specific location or under particular circumstances.
Cinnaholic states that other than the financial performance representations included in Item 19, it does not make any representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets. Cinnaholic also does not authorize its employees or representatives to make any such representations either orally or in writing. If a prospective franchisee receives any other financial performance information or projections of future income, they are instructed to report it to Cinnaholic's management, the Federal Trade Commission, and the appropriate state regulatory agencies. This is to ensure that all financial claims are vetted and accurate, protecting potential franchisees from misleading information.