What happens to any unused marketing funds collected by Cinnaholic?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
chise agreement. The non-refundable franchise fees received but not yet earned as of December 31, 2024 and 2023, were $2,728,141 and $3,288,772, respectively. Prepaid commissions paid but not expensed as of December 31, 2024 and 2023, were $884,883 and $972,229, respectively.
5. MARKETING FUND FEES
The Company's franchise agreement allows for collection of marketing fund fees, whose proceeds are restricted to brand name and franchise advertising. Any unused funds are carried forward to subsequent periods. Marketing fund fees collected and expended for the years ending December 31, 202
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 61)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, any unused marketing funds collected by Cinnaholic are carried forward to subsequent periods. The franchise agreement allows Cinnaholic to collect marketing fund fees, which are restricted to advertising the brand name and franchise.
For a prospective franchisee, this means that the marketing fees they contribute are intended to be used specifically for marketing and advertising purposes. The fact that unused funds are carried forward suggests that Cinnaholic aims to utilize all collected marketing funds effectively over time, rather than treating them as revenue.
The FDD also states that marketing fund fees collected and expended for the years ending December 31, 2024 and 2023 were $309,415 and $610,238, respectively. Additionally, the amounts collected but not spent at year end are not included in revenues and instead show as a marketing fund liability on the balance sheet. Marketing fund fees collected but not yet spent as of December 31, 2024 and 2023 were $0 and $0, respectively. This indicates that Cinnaholic spent all of the marketing funds collected during those years.