Under what conditions can Cinnaholic increase the royalty fee for a franchisee?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
nchisor 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
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the standard royalty fee is 5% of the Bakery's gross sales. However, Cinnaholic has the right to increase this royalty fee under specific circumstances.
Specifically, if a Cinnaholic franchisee defaults on the Franchise Agreement by failing to comply with the operational standards and specifications outlined in the Operations Manual, or if they fail to adhere to the obligations set forth in Section 9 of the agreement, Cinnaholic can increase the royalty fee.
In such cases of default, Cinnaholic can raise the royalty fee to 10% of gross sales. Additionally, Cinnaholic may impose a surcharge of $250 per week, or a pro-rata portion of that amount for partial weeks, until the franchisee corrects the identified defaults. This provision serves as an incentive for franchisees to maintain Cinnaholic's standards and fulfill their contractual obligations.