Is the initial Cinnaholic franchise fee refundable?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
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ITEM 5 INITIAL FEES
Franchise Fee and Market Development Fee. You must pay us an initial franchise fee equal to $40,000 for each Bakery franchised by you. The initial franchise fee is uniform for all franchisees purchasing a franchise through this Disclosure Document. We have no intention, now or in the future, of reducing the initial franchise fee for any prospective franchisee, although we reserve the right to do so in our sole discretion on a case-by-case basis. We reserve the right to waive or reduce the initial franchise fee for our affiliates, employees, existing franchises or if we run a franchise marketing promotion. Initial franchise fees are not refundable under any circumstances.
In the year ended December 31, 2024, three franchisees received initial franchise fee discounts. One franchisee received a two-store initial franchise fee discount of $5,000 ($2,500 per store), one franchisee received an initial franchise fee discount of $5,000, and one franchisee received an initial franchise fee discount of $1,000. Our current policy is that we may offer discounts for franchisees purchasing three or more units. We also offer Veteran discounts of 10% for the first Bakery franchised by you.
As discussed in Item 1 of this Disclosure Document, you must enter into a Development Agreement where you will commit to develop an agreed number of CINNAHOLIC® Bakeries consistent with the Development Schedule. When you sign the Development Agreement, you must pay us an upfront initial franchise fee of $40,000 for each Bakery that you agree to develop under the Development Agreement (the "Development Fee"), with the minimum number of bakeries being one. The Development Fee is payable in one lump sum when you sign the Development Agreement.
Source: Item 5 — INITIAL FEES (FDD pages 11–12)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the initial franchise fee and other fees are generally non-refundable. Specifically, the initial franchise fee of $40,000 for each bakery, as well as the Development Fee, are not refundable under any circumstances. This means that once a franchisee pays these fees to Cinnaholic, they cannot get the money back, regardless of whether they successfully open a bakery or if the agreement is terminated.
In addition to the initial franchise fee and the Development Fee, Cinnaholic may charge a Project Manager/Coordinator Fee of $1,795 if a location is selected and approved at the time the Franchise Agreement is signed. This fee covers Cinnaholic's monitoring of the bakery project's progress and assistance in expediting preconstruction activities. Like the other fees, the Project Manager/Coordinator Fee is also non-refundable.
While the standard policy is that initial fees are non-refundable, Cinnaholic does reserve the right to offer discounts on the initial franchise fee in certain situations. In 2024, some franchisees received discounts, including a two-store discount of $5,000 ($2,500 per store), a $5,000 discount, and a $1,000 discount. Cinnaholic's current policy is to consider discounts for franchisees purchasing three or more units and offers a 10% discount for veterans on their first bakery. However, these discounts are not guaranteed and are offered at Cinnaholic's discretion.