Can the royalty fees or advertising fees increase in the renewal Cinnaholic franchise agreement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
- (iii) Franchisee shall execute, at Franchisor's option, Franchisor's then-current form of Franchise Agreement, which Franchise Agreement shall supersede in all respects the terms and conditions of this Agreement and may contain terms and conditions substantially different from those set forth herein, including, without limitation, an increase in Royalty Fees or Advertising Fees (as such terms are hereinafter defined); provided, however, the renewal Franchise Agreement shall not provide for any additional renewal rights;
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, when renewing a franchise agreement, Cinnaholic has the option to require franchisees to execute the then-current form of the Franchise Agreement. This new agreement supersedes the original and may contain substantially different terms and conditions. Critically, these changes can include an increase in both Royalty Fees and Advertising Fees.
This means that a Cinnaholic franchisee should be prepared for the possibility of higher fees upon renewal. While the renewal agreement cannot provide additional renewal rights, the potential for increased fees could significantly impact the profitability of the franchise. Franchisees need to factor this risk into their long-term financial planning and assess whether the potential benefits of renewal outweigh the costs of potentially higher fees.
In addition to the potential for increased fees, franchisees must also pay a renewal fee equal to one-half of the then-current Franchise Fee. They must also complete any required maintenance, refurnishing, renovation, modernizing, and remodeling of the bakery to meet Cinnaholic's current standards. Franchisees must also be current on all payments to Cinnaholic and its affiliates, and they may be required to attend retraining programs. Finally, franchisees must provide a general release of any claims against Cinnaholic and provide evidence that they can remain in possession of the franchised site.