Does Cinnaholic receive fees from a supplier as a condition of approving that supplier?
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 may receive fees from a supplier as a condition of approving that supplier. This means that Cinnaholic has the right to collect payments from suppliers in exchange for adding them to the list of approved vendors that franchisees are allowed to use. These fees are usually based upon an amount per case or an amount per pound.
For a prospective franchisee, this arrangement means that the cost of goods from approved suppliers could potentially be higher, as suppliers may pass on the cost of these fees to the franchisees. However, Cinnaholic states that they may negotiate supply arrangements with suppliers for the benefit of franchisees. It is important to note that Cinnaholic does not provide material benefits to franchisees based on their use of designated or approved suppliers.
In 2024, Cinnaholic received $3,735 in rebates from Fun Express, $22,000 in rebates from Ventura Foods, and $6,523 in rebates from Saebert. These rebates were placed directly into their Marketing Fund. Cinnaholic also states that they may use the monies they receive from authorized suppliers without restriction for any purpose they deem appropriate or necessary. Franchisees should be aware that Cinnaholic has the discretion to use these funds as they see fit, which may or may not directly benefit the franchisees.
It is typical in the franchise industry for franchisors to receive rebates or other benefits from approved suppliers. This practice can help franchisors offset costs and provide additional support to the franchise system. However, it is important for prospective franchisees to understand how these arrangements work and how they may impact the cost of goods and services.