When is the statement of gross sales due to Cinnaholic with royalty and advertising fee payments?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Payment of the Advertising Fee shall be made on or before Tuesday of each week and be based upon Gross Sales of the Bakery for the preceding week. Advertising Fees shall be paid concurrently with the payment of the Royalty Fees.
- 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.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, franchisees must submit their gross sales figures along with royalty and advertising fee payments on a weekly basis. Specifically, both the royalty fee, which is 5% of gross sales, and the advertising fee, which cannot exceed 2% of gross sales, are due on or before Tuesday of each week. These payments cover the gross sales from the preceding week.
This weekly payment schedule means that Cinnaholic franchisees need to maintain accurate and up-to-date records of their sales. They must also ensure timely submission of payments to avoid potential penalties or breaches of the franchise agreement. The franchisor has the right to increase the royalty fee to 10% of Gross Sales and impose a surcharge of $250 per week if the franchisee fails to comply with operational standards or specifications.
For a prospective Cinnaholic franchisee, this weekly payment obligation highlights the importance of efficient financial management and consistent sales tracking. It's crucial to factor in these ongoing costs when projecting profitability and managing cash flow. Furthermore, understanding the potential for increased fees due to non-compliance is essential for maintaining a healthy franchisor-franchisee relationship and ensuring the long-term success of the Cinnaholic bakery.