Which item in the Cinnaholic Disclosure Document refers to the franchisee's obligations regarding advertising?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 22: CONTRACTS]
The particular Advertising Cooperative(s) in which Franchisee may be required to participate shall be designated by Franchisor in its sole discretion (which designations may be based upon, without limitation, the particular Designated Market Area or the Area of Dominant Influence, as those terms are used in the advertising industry, where the CINNAHOLIC® Bakeries operated by Franchisee are located).
Franchisee's payments to any Advertising Cooperative shall be determined by Franchisee and those other franchisees of the CINNAHOLIC® System and/or Franchisor, as the case may be, who are participants in such Advertising Cooperative, as set forth in the by-laws of that Advertising Cooperative or membership, dues, participation or other payment agreements of such Advertising Cooperative.
Franchisee, however, may not be required to spend more than 2% of Gross Sales per annum in connection with any Advertising Cooperative.
Amounts paid to an Advertising Cooperative shall be credited against payments Franchisee is otherwise required to make for local advertising as required by Section 11.3 above.
Any payments to an Advertising Cooperative shall be in addition to the amounts required to be paid or spent under Sections 11.1 and 11.2 hereof.
Franchisee shall enter into such formal agreements with such other franchisees of the CINNAHOLIC® System and/or Franchisor, as the case may be, as shall be necessary or appropriate to accomplish the foregoing and Franchisee shall abide by such formal agreements and decisions that the Advertising Cooperative is authorized by Franchisor to make related to advertising and marketing in the area covered by the Advertising Cooperative.
If Franchisee becomes delinquent in its dues or other payments to the Advertising Cooperative or fails to abide by any formal agreements or authorized decisions of the Advertising Cooperative, such delinquency or failure shall be deemed a failure to participate in the Advertising Cooperative and a material breach of this Agreement.
Franchisor may upon 30 days' written notice to Franchisee suspend or terminate an Advertising Cooperative's program or operations.
As a member, officer or director of an Advertising Cooperative, at the request of Franchisor, Franchisee shall provide to Franchisor all information requested by Franchisor related to such Advertising Cooperative and Franchisee shall have the obligation to provide such information within 10 days after Franchisor's request to Franchisee.
[Item 11: FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING]
Franchisee recognizes the mutual benefit to Franchisee, Franchisor and other franchisees of the CINNAHOLIC® System of the uniformity of the appearance, services, products and advertising of the CINNAHOLIC® System and acknowledges and agrees that such uniformities are necessary for the successful operation of CINNAHOLIC® Bakeries. Franchisee also acknowledges and agrees that products and services sold under the Marks and at CINNAHOLIC® Bakeries have a reputation for excellence. This reputation has been developed and maintained by Franchisor, and Franchisee acknowledges and agrees that it is of the utmost importance to Franchisor, Franchisee, and all other franchisees of the CINNAHOLIC® System that such reputation be maintained. To this end, Franchisee covenants and warrants with respect to the operation of the Bakery that Franchisee and its employees and agents will comply with all of the requirements of the CINNAHOLIC® System and the Operations Manual and will throughout the term of this Agreement:
[Item 22: CONTRACTS]
11.2. Advertising Fund. In addition to all other amounts required to be paid hereunder, during the term hereof, Franchisee must pay to Franchisor, or such other entity designated by Franchisor, an amount based upon Gross Sales to be designated by Franchisor from time to time, in its sole discretion, provided such amount shall not exceed 2% of Gross Sales (the "Advertising Fee"), which amount shall be used by the Advertising Fund (as such term is hereinafter defined). The Advertising Fee shall be the same for all CINNAHOLIC® franchisees. Payment of the Advertising Fee shall be made on or before Tuesday of each week and be based upon Gross Sales of the Bakery for the preceding week. Advertising Fees shall be paid concurrently with the payment of the Royalty Fees.
Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 26–27)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Item 22 and Item 11 both discuss the franchisee's obligations regarding advertising. Item 22 describes the contracts related to advertising cooperatives, stating that the franchisee may be required to participate in advertising cooperatives designated by Cinnaholic. The franchisee's payments to these cooperatives are determined by the participants, but the franchisee will not be required to spend more than 2% of gross sales per annum in connection with any Advertising Cooperative. Payments to the Advertising Cooperative shall be credited against payments Franchisee is otherwise required to make for local advertising as required by Section 11.3 above.
Item 22 also states that the franchisee must enter formal agreements with other franchisees or Cinnaholic to facilitate advertising efforts. Failure to comply with the advertising cooperative's agreements or payments constitutes a breach of the franchise agreement. Cinnaholic retains the right to suspend or terminate an advertising cooperative's program with 30 days' notice. Additionally, franchisees must provide requested information about the Advertising Cooperative to Cinnaholic within 10 days of the request.
Item 11 outlines that franchisees recognize the mutual benefit to Franchisee, Franchisor and other franchisees of the Cinnaholic System of the uniformity of the appearance, services, products and advertising of the Cinnaholic System and acknowledges and agrees that such uniformities are necessary for the successful operation of Cinnaholic Bakeries. Franchisee also acknowledges and agrees that products and services sold under the Marks and at Cinnaholic Bakeries have a reputation for excellence. To this end, Franchisee covenants and warrants with respect to the operation of the Bakery that Franchisee and its employees and agents will comply with all of the requirements of the Cinnaholic System and the Operations Manual and will throughout the term of this Agreement.
Item 22 also states that during the term of the agreement, the franchisee must pay Cinnaholic, or another entity designated by Cinnaholic, an amount based on gross sales, not exceeding 2% of gross sales (the "Advertising Fee"). This fee is used by the Advertising Fund. The Advertising Fee shall be the same for all Cinnaholic franchisees. Payment of the Advertising Fee shall be made on or before Tuesday of each week and be based upon Gross Sales of the Bakery for the preceding week. Advertising Fees shall be paid concurrently with the payment of the Royalty Fees.