When is the statement of gross sales due to Cinnaholic with each royalty and advertising fee payment?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
ranchisor granting Franchisee the right to develop, open and operate the Bakery using the Marks and the CINNAHOLIC® System and that the Franchise Fee is fully earned by Franchisor at the time this Agreement is executed, and the Franchise Fee shall not be refundable for any reason.
5. ROYALTY FEE; METHOD OF PAYMENT; LATE PAYMENT
5.1. Royalty Fee. In addition to all other amounts required to be paid hereunder, during the term hereof, Franchisee agrees to pay to Franchisor for the rights granted hereunder a royalty fee equal to 5% of the Gross Sales (as such term is hereinafter defined) of the Bakery (the "Royalty Fee"). Payment of the Royalty Fee shall be made on or before Tuesday of each week for Gross Sales of the Bakery for the preceding week. Franchisee acknowledges and agrees that in the event Franchisee is in default of this Agreement for failure to comply with any of the operational standards or specifications set forth in the Operations Manual (as defined in Section 7 of this Agreement) or failure to adhere to the obligations set forth in Section 9 of this Agreement, Franchisor may increase the Royalty Fee to 10% of Gross Sales and impose a surcharge of $250 per week or pro rata portion of the week until such time as the defaults are cured.
5.2. Definition of Gross Sales. Gross Sales shall mean the amount of sales of all products and services sold in, on, about or from the Bakery, together with any other revenues derived from the operation of the Bakery, whether by Franchisee or by any other person, whether or not in accordance with the terms hereof, and whether for cash or on a charge, credit, barter or time basis, including, but not limited to, all such sales and services (i) where orders originate and/or are accepted by Franchisee in the Bakery but delivery or performance thereof is made from or at any place other than the Bakery or (ii) pursuant to telephone or other similar orders received or filled at or in the Bakery. For purposes of determining the Royalty Fee and Advertising Fee, there shall be deducted from Gross Sales: (a) the amount of refunds, allowances or discounts to customers (including coupon sales) up to 10% of the Gross Sales, provided the related sales have previously been included in Gross Sales; and (b) the amount of any excise or sales tax levied upon retail sales and paid over to the appropriate governmental authority.
5.3. Automated Bank Draft. Franchisee understands and agrees that Franchisor reserves the right and may require, in its sole discretion, that all Royalty Fees, Advertising Fees, Advertising Cooperative (as defined below) contributions and other fees or contributions required to be paid to Franchisor or any Advertising Cooperative hereunder must be paid by automated bank draft or other reasonable means necessary to ensure payment of such fees are received by Franchisor or the appropriate Advertising Cooperative. Franchisee agrees to comply with Franchisor's payment instructions.
5.4. Late Payments and Insufficient Funds.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, both the royalty fee and the advertising fee payments are due on or before Tuesday of each week. These payments are based on the gross sales of the Cinnaholic bakery for the preceding week. This means that Cinnaholic franchisees must calculate their gross sales each week and remit the appropriate royalty and advertising fees by Tuesday.
The royalty fee is 5% of gross sales, but Cinnaholic can increase this to 10% if a franchisee fails to comply with operational standards or other obligations outlined in the Operations Manual or Section 9 of the Franchise Agreement. In such cases, Cinnaholic may also impose a $250 per week surcharge until the issues are resolved. The advertising fee is determined by Cinnaholic, but it cannot exceed 2% of gross sales.
Gross sales include all revenues from products and services sold at the bakery, whether for cash, credit, or other forms of payment. However, franchisees can deduct refunds, allowances, and discounts to customers (up to 10% of gross sales) and any excise or sales taxes paid to governmental authorities when calculating gross sales for the purpose of these payments. Therefore, franchisees need to maintain accurate records of all sales, refunds, discounts, and taxes to ensure accurate and timely payments of royalty and advertising fees to Cinnaholic.