Under what condition is the payment of the Initial Franchise Fees for a Cinnaholic franchise deferred in Minnesota?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Based on our initial financial statements, the Commissioner of Commerce for the State of Minnesota requires that payment of all Initial Franchise Fees be deferred until such time as all initial obligations which we owe to you under the Franchise Agreement and any other agreement have been fulfilled by us and you have commenced doing business pursuant to the Franchise Agreement.
Therefore, Initial Franchise Fees must be paid to us in full by you immediately upon the commencement of your CINNAHOLIC® business.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, in Minnesota, the payment of Initial Franchise Fees is deferred based on the initial financial statements of Cinnaholic. The Commissioner of Commerce for the State of Minnesota mandates that the payment of all Initial Franchise Fees be postponed. This deferral lasts until Cinnaholic has fulfilled all its initial obligations to the franchisee under the Franchise Agreement or any other agreement. Furthermore, the franchisee must have commenced business operations under the Franchise Agreement.
This condition means that a prospective Cinnaholic franchisee in Minnesota will not be required to pay the initial franchise fee upfront. Instead, the payment is contingent upon Cinnaholic completing its pre-opening obligations, such as providing training, site selection assistance, and other support outlined in the franchise agreement. Only after these obligations are met and the franchisee has started operating their Cinnaholic bakery does the initial franchise fee become due.
This deferral can be advantageous for franchisees as it reduces their initial financial burden and aligns the franchisor's interests with the franchisee's success. It ensures that Cinnaholic is motivated to provide the necessary support to get the franchisee's business up and running before receiving the franchise fee. However, franchisees should be prepared to pay the full Initial Franchise Fees immediately once their Cinnaholic business commences.