If you are considering a Cinnaholic franchise, don’t get blindsided by these 27 important franchise fees (from the initial franchise fee, to the royalty fee, to 25 other fees found in Items 5 and 6 of Cinnaholic’s 2018 FDD).

1.  Franchise Fee:  $35,000

• You must pay Cinnaholic an initial franchise fee equal to $35,000 for each Bakery franchised by you. The initial franchise fee is uniform for all franchisees purchasing a franchise through the Disclosure Document. Initial franchise fees are not refundable under any circumstances.

2.  Development Fee:  $35,000 for each Bakery that you agree to develop under the Development Agreement

• You must enter into a Development Agreement where you will commit to develop an agreed number of Cinnaholic Bakeries consistent with the Development Schedule. When you sign the Development Agreement, you must pay Cinnaholic an upfront initial franchise fee of $35,000 for each Bakery that you agree to develop under the Development Agreement (the “Development Fee”).

• The Development Fee is payable in one lump sum when you sign the Development Agreement.

• If a Bakery is developed in accordance with the Development Schedule, the Development Fee attributable to that Bakery will be credited towards the payment of the initial franchise fee due under the Franchise Agreement.

• If a Bakery is not established in accordance with the Development Schedule, the Development Fee that would have otherwise been credited towards payment of the initial franchise fee for that Bakery will be forfeited and retained by Cinnaholic.

• If you and Cinnaholic are unable to agree upon a site for a Bakery and, as a result, you fail to meet your Development Schedule, Cinnaholic may terminate your Development Agreement.

• If, for any reason, the Development Agreement terminates before all or a portion of the Development Fee has been applied to the initial franchise fees, Cinnaholic will retain the unapplied portion of the Development Fee to compensate it for its time, effort, and lost opportunities.

• The Development Fee is uniform for all franchisees purchasing through the Disclosure Document. The Development Fee is not refundable under any circumstance.

3.  Other Initial Fees:  varies

• Generally, there are no additional initial fees.

• Under the Franchise Agreement, Cinnaholic will provide you with assistance in opening the Bakery and training your employees. Although Cinnaholic does not intend to charge you for this assistance, it reserves the right to charge you for extraordinary travel and living expenses incurred by its employees in providing this assistance.

• In the event you request additional opening assistance, which Cinnaholic envisions will only occur in unique circumstances, and it agrees to provide you with the extra assistance, you must reimburse it for all costs and expenses it incurs in connection with providing you this additional assistance, including wages, overhead, and travel and living expenses of its employees providing the assistance and it has the right to charge its daily fee for additional assistance.

4.  Royalty Fee:  5% of Gross Sales unless you are in default for failure to maintain standards

• Due Date:  Every Tuesday for the preceding week’s Gross Sales.

• Cinnaholic will debit your bank account for the Royalty Fee due.

5.  Advertising Fund Fee:  2% of Gross Sales

• Due Date:  Same as Royalty Fee.

6.  Advertising Cooperatives:  may not exceed 2% of Gross Sales

• Due Date:  Same as Royalty Fee or as designated by your cooperative.

7.  Local Advertising:  a minimum of 2% of Gross Sales

• Due Date:  As incurred.

• You must make local advertising expenditures as required by the Franchise Agreement. You may determine the form and media, subject to Cinnaholic’s approval before you make the expenditures.

8.  Advertising Deficiency:  amount of local advertising deficiency

• Due Date:  Immediately upon demand.

• If you fail to make local advertising expenditures, Cinnaholic may do so on your behalf and you will reimburse it for those expenditures.

9.  Renewal Fee:  50% of the amount of the then-current initial franchise fee

• Due Date:  Before renewal.

• Payable when, and if, you renew your Franchise Agreement. There are other conditions to renew.

10.  Transfer/Assignment Fee Under Franchise Agreement:  one half of the then-current initial franchise fee at the time of the Transfer/Assignment, plus expenses

• Due Date:  Before the consummation of the transfer or sale.

• Payable when, and if, you transfer or sell your franchise. There are other conditions to transfer.

11.  Transfer/Assignment Fee Under Development Agreement:  $5,000, plus expenses

• Due Date:  Before the consummation of the transfer or sale.

• Payable when, and if, you transfer or sell the Development Agreement. There are other conditions to this transfer.

12.  Interest and Late Payment Fees:  up to the highest rate permitted by law but no more than 18% per annum, plus $100 per occurrence

• Due Date:  Immediately on demand.

• Payable on all overdue amounts. Interest begins from the date of non-payment or underpayment.

13.  Insufficient Funds Service Fee:  $100 per occurrence

• Due Date:  Immediately on demand.

• Payable if any of your payments to Cinnaholic are not honored by your financial institution.

14.  Late Report Fee:  $100 per occurrence

• Due Date:  Immediately on demand.

• Cinnaholic may require you to pay to it $100 each time you fail to submit to it any required reports or information.

15.  Audit Expenses:  will vary under the circumstances

• Due Date:  Immediately on demand.

16.  Additional On-Site Training Due to Failure to Maintain Standards:  will vary under the circumstances

• Due Date:  As incurred.

17.  Counseling and Advisory Services:  will vary under the circumstances

• Due Date:  As incurred.

18.  Additional On-Site Training and Assistance:  will vary under the circumstances

• Due Date:  As incurred.

• You will pay a reasonable fee (e.g. $300 per day) for additional training you request, plus the reimbursement of Cinnaholic’s trainers’ travel and living expenses and other related expenses.

19.  Indemnification:  will vary under the circumstances

• Due Date:  As incurred.

• You must reimburse Cinnaholic if it is held liable for damages or other relief related to the operation of your franchise.

20.  Insurance Premiums:  will vary under the circumstances

• Due Date:  Immediately on demand.

• You must reimburse Cinnaholic if it purchases insurance for you because you failed to do so.

21.  Conferences:  reasonable fee under the circumstances, if any

• Due Date:  Upon demand.

• If Cinnaholic requires you to attend a conference or other meeting, you may have to pay a reasonable fee, which Cinnaholic expects will not be more than $500 per person.

• As of the date of the 2018 Disclosure Document, Cinnaholic does not charge a fee.

22.  Costs and Attorneys’ Fees:  will vary under the circumstances

• Due Date:  As incurred.

• Payable only if you do not comply with the Franchise Agreement.

23.  Product Purchases:  varies

• Due Date:  Upon invoice.

• You must buy products that (i) meet Cinnaholic’s standards and specifications and (ii) are purchased from suppliers designated or approved by Cinnaholic.

24.  Product/Supplier Approval Costs:  cost of testing, not to exceed $500

• Due Date:  As incurred.

• This covers the cost of testing new products or inspecting new suppliers you recommend.

25.  Management Fee:  10% of Gross Sales and Cinnaholic’s reasonable costs and expenses

• Due Date:  Upon demand.

• Payable only if you are in default of the Franchise Agreement or you fail to maintain your Bakery in accordance with Cinnaholic’s standards.

• Cinnaholic may send in its personnel to operate the Bakery until the default is cured or you are able to meet its standards. During its operation of your Bakery, you must pay Cinnaholic 10% of the Bakery’s Gross Sales plus all costs and expenses incurred by it in providing this assistance.

26.  Reimbursement of Costs and Expenses Regarding Modification of Franchise Agreement:  costs and attorneys’ fees

• Due Date:  Upon demand.

27.  Maintenance, Service, and Support Contract Fees:  to be determined

• Due Date:  As incurred.