Based on Cinnaholic's 2025 Franchise Disclosure Document, the financial statements ending December 31, 2024, include details about non-refundable franchise fees. These fees, net of amounts earned based on allowable direct services, are recorded as deferred revenues. As of December 31, 2024, the non-refundable franchise fees received but not yet earned amounted to $2,728,141. These fees are recognized over the life of the franchise agreement.

This means that Cinnaholic collected $2,728,141 in non-refundable franchise fees that were not yet recognized as earned revenue by the end of 2024. The actual amount of franchise fees collected during the year could be higher, as this figure represents only the unearned portion. The revenue recognition policy indicates that Cinnaholic amortizes these fees over the term of the franchise agreement, recognizing a portion of the revenue each year as it is earned through ongoing services and support provided to franchisees.

For a prospective Cinnaholic franchisee, this information is important for understanding how the initial franchise fee is accounted for by the franchisor. While the fee is paid upfront, Cinnaholic recognizes it as revenue over the life of the franchise agreement. This accounting practice is common in franchising and reflects the ongoing obligations of the franchisor to support the franchisee's business. Franchisees should inquire about the specific services and support covered by the initial franchise fee and how these contribute to the revenue recognition schedule.

It's also worth noting that the FDD mentions prepaid commissions paid but not expensed, as well as marketing fund fees collected and expended. These figures provide additional context about Cinnaholic's financial operations, but they are separate from the initial franchise fees. Understanding these different revenue streams and expenses can help a potential franchisee assess the overall financial health and stability of the Cinnaholic franchise system.