For what purpose can Cinnaholic use the monies received from authorized suppliers?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
products they provide to our franchisees.
We and our affiliates have the right to receive payments or other benefits like rebates, discounts, and allowances from authorized suppliers based upon their dealings with you and other franchisees and we may use the monies we receive without restriction for any purpose we deem appropriate or necessary. Additionally, we have received rebates from various suppliers which we have placed directly into our Marketing Fund. Suppliers may pay us based upon the quantities of products the CINNAHOLIC® franchise system purchases from them. These fees will usually be based upon an amount per case or an amount per pound. We may receive fees from a supplier as a condition of our approval of that supplier. We do not provide material benefits to franchisees (for example, renewal of existing or granting additional franchises) based on their use of designated or approved suppliers. For the fiscal year ended December 31, 2024, we received $3,735 in rebates from Fun Express, $22,000 in rebates from Ventura
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 21–25)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Cinnaholic has broad discretion over the use of payments or other benefits received from authorized suppliers. Specifically, Cinnaholic can use these monies without restriction for any purpose they deem appropriate or necessary. This includes rebates, discounts, and allowances from authorized suppliers based on the dealings between the suppliers and Cinnaholic franchisees.
Notably, Cinnaholic also states that they have previously placed rebates received from various suppliers directly into their Marketing Fund. For example, during the fiscal year ended December 31, 2024, Cinnaholic received $3,735 in rebates from Fun Express, $22,000 in rebates from Ventura Foods, and $6,523 in rebates from Saebert. The fees paid by suppliers are usually based on an amount per case or an amount per pound. Cinnaholic may also receive fees from a supplier as a condition of their approval of that supplier.
This arrangement means that Cinnaholic franchisees may not directly benefit from supplier rebates or discounts, as Cinnaholic has the right to use these funds for any purpose. However, some of these funds may be allocated to the Marketing Fund, which could indirectly benefit franchisees through increased brand awareness and marketing efforts. Prospective franchisees should consider this when evaluating the overall cost and benefits of investing in a Cinnaholic franchise, as it highlights the franchisor's control over supplier relationships and the associated financial benefits.