What is the standard Royalty Fee for a Cinnaholic franchise, assuming no default?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee | 5% of Gross Sales unless you are in default for failure to maintain standards | Every Tuesday for the preceding week's Gross Sales | We will debit your bank account for the Royalty Fee due. See Notes 2 and 7. |
Source: Item 6 — OTHER FEES (FDD pages 13–17)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the standard royalty fee is 5% of gross sales, assuming the franchisee is not in default for failure to maintain standards. This fee is paid every Tuesday for the preceding week's gross sales. Cinnaholic will debit the franchisee's bank account for the royalty fee due, so franchisees must sign an electronic transfer of funds authorization for their bank account.
Gross sales are defined as the total revenue from all products and services sold at the bakery, including revenues from orders taken at the bakery but fulfilled elsewhere, and telephone or similar orders. Deductions from gross sales are allowed for customer refunds, allowances, or discounts up to 10% of gross sales, and for excise or sales taxes paid to governmental authorities.
It's important to note that if a Cinnaholic franchisee defaults on the franchise agreement by failing to meet minimum operational standards, Cinnaholic can increase the royalty to 10% of gross sales and charge an additional $250 each week until the deficiencies are rectified. This highlights the importance of maintaining Cinnaholic's standards to avoid increased fees.