How are advertising contributions from Cicis franchisees recorded?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
Marketing fund: The Company's franchises and corporate owned restaurants each generally contribute the greater of a set amount, per the individual franchise agreement, or approximately 5% of sales per month as a marketing contribution in accordance with their respective franchise agreements. Marketing contributions and expenses are tracked separately from other activities. These contributions received are included in cash and cash equivalents—marketing fund and accounts receivable—marketing fund in the combined balance sheets. Any amounts not used in a fiscal year are carried over to the succeeding year and shown as a deferred liability. Amounts used in excess of marketing contributions would be recognized as an expense within advertising costs on the combined statements of income.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–64)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, advertising contributions from both franchisees and corporate-owned restaurants are generally calculated as the greater of a set amount (as specified in the individual franchise agreement) or approximately 5% of sales per month. These contributions are made in accordance with the respective franchise agreements. Cicis tracks these marketing contributions and expenses separately from its other financial activities.
These contributions are recorded as assets within the company's combined balance sheets, specifically under "cash and cash equivalents—marketing fund" and "accounts receivable—marketing fund." This means that the funds are readily available for use in marketing activities. Any contributions that are not utilized during a fiscal year are carried over to the next year. These unspent amounts are then reported as a deferred liability on the balance sheet, indicating an obligation to use those funds for marketing purposes in the future.
If Cicis spends more on marketing than the contributions received, the excess amount is recognized as an expense within advertising costs on the combined statements of income. This provides transparency regarding how marketing funds are managed and spent, and ensures that franchisees can see how their contributions are being used to support the Cicis brand.