Is Cinnaholic prohibited from charging higher or lower Advertising Fund rates for future franchisees?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
so, and will not set maximum or minimum prices which you must charge.
Advertising. We provide advertising materials and services to you through a national advertising fund we have established and control (the "Advertising Fund"). You must participate in the Advertising Fund by contributing 2% of Gross Sales. All affiliate-owned Bakeries or Bakeries we own will also contribute to the Advertising Fund on an equal percentage basis with all franchised Bakeries. The Advertising Fund is established as a separate banking account and monies received from you will be accounted for separately from our other funds. There is no fiduciary or trust relationship created by our administering the Advertising Fund. We may cause the Advertising Fund to be incorporated or operated through a separate entity if we deem appropriate. (See Franchise Agreement, Section 11.2.) We anticipate all of our franchisees will contribute to the Advertising Fund, although there is no prohibition against us charging higher or lower rates for future franchisees. (See Franchise Agreement, Section 11.2.) We also may forgive, waive, settle, or compromise claims by or against the Advertising Fund. We may defer or reduce a franchisee's contribution. If we terminate the Advertising Fund, we will distribute all unused monies to the contributors in proportion to their respective contributions during a pre-determined period. For the 2024 fiscal year end, we collected $504,162.50 in the Ad Fund. We expended $444,137.79 in the following approximate proportions: Online Advertising ($89,825.20, or 20.22%), Social Media ($268,087.81, or 60.36%), Marketing Consultants ($61,800, or 13.91%), Creative ($12,846.00, or 2.89%), Publication Ads ($3,916.85, or .88%), Website ($6,030.88, or 1.36%), Administrative ($1,333.65, or .30%), and Miscellaneous ($297.40, or .08%). Fund expenses were m
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 27–35)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic is not prohibited from charging future franchisees higher or lower rates for the Advertising Fund. Currently, franchisees must contribute 2% of Gross Sales to the Advertising Fund. All affiliate-owned bakeries or bakeries that Cinnaholic owns will also contribute to the Advertising Fund on an equal percentage basis with all franchised Bakeries. The Advertising Fund is established as a separate banking account, and the monies received will be accounted for separately from Cinnaholic's other funds.
Cinnaholic may choose to forgive, waive, settle, or compromise claims by or against the Advertising Fund, and they may also defer or reduce a franchisee's contribution. If Cinnaholic terminates the Advertising Fund, all unused monies will be distributed to the contributors in proportion to their respective contributions during a pre-determined period. For the 2024 fiscal year end, Cinnaholic collected $504,162.50 in the Ad Fund and expended $444,137.79.
The expenditures were divided approximately as follows: Online Advertising (20.22%), Social Media (60.36%), Marketing Consultants (13.91%), Creative (2.89%), Publication Ads (.88%), Website (1.36%), Administrative (.30%), and Miscellaneous (.08%). Fund expenses were more than Fund contributions during the year. $60,024.71 was collected in 2024, but not expended, and remains in the Fund for use in 2025 or later years.
Prospective franchisees should be aware that while the current contribution is 2% of Gross Sales, this rate could change for future franchisees. It is important to discuss with Cinnaholic their plans for the Advertising Fund and whether they anticipate any changes to the contribution rate in the future.