Can Cicis or its affiliates profit from franchisee purchases from approved suppliers?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
Purchasing Arrangements & Rebates
We and our affiliates may profit or derive revenue or other benefits from your purchases from approved or designated suppliers, and we and/or our affiliates may receive payments, fees, commissions, or reimbursements from approved or designated suppliers in respect of your purchases. If we do, neither we nor our affiliates will be obligated to spend funds received from approved suppliers nor will we or they be bound to spend such funds in any particular manner or for any particular purpose (unless provided in the agreement with the approved supplier). We receive vendor rebates in the range of $0.10 to $26 per unit purchased from food and supplies vendors based on franchisee purchases of Operating Assets. We or our affiliates may negotiate purchase arrangements, including prices and terms, with designated and approved suppliers on behalf of Cicis Restaurants.
During the 2024 fiscal year, we did not receive any revenue from the sale or lease of goods and services to our franchisees; however, (i) we received rebates amounting to $9,752,184 from our designated suppliers, representing 22.92% of our total revenue of $42,546,700 for that fiscal year; and (ii) JMC received $108,660,523 from the sale or lease of products or services to franchisees.
As of the date of this Disclosure Document, you do not have to participate in any purchasing or distribution cooperative.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 25–28)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Cicis and its affiliates may profit from franchisee purchases from approved or designated suppliers. These profits can come in the form of payments, fees, commissions, or reimbursements from these suppliers. Cicis is not obligated to spend these funds in any particular way unless specified in an agreement with the supplier. Vendor rebates range from $0.10 to $26 per unit purchased from food and supplies vendors based on franchisee purchases of operating assets.
In the 2024 fiscal year, Cicis did not receive any revenue from the direct sale or lease of goods and services to franchisees. However, they received rebates amounting to $9,752,184 from designated suppliers, which represented 22.92% of their total revenue of $42,546,700 for that year. Additionally, JMC, an affiliate of Cicis, received $108,660,523 from the sale or lease of products or services to franchisees.
This arrangement is common in franchising, where franchisors negotiate with suppliers and receive rebates or other benefits based on the volume of purchases made by their franchisees. For a prospective Cicis franchisee, this means that the cost of goods and services may be influenced by these arrangements. While Cicis aims to maintain quality and consistency through approved suppliers, it also benefits financially from these relationships. Franchisees are required to purchase a significant portion of their goods and services, estimated between 90% to 95% of their total costs, from these approved sources, making these purchasing arrangements a crucial aspect of the franchise operation.