How does Cicis allocate the costs associated with the services provided to related-party affiliates?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
ncial statements to conform to the current year presentation. These reclassifications had no effect on reported net income or members' capital.
Notes to Combined Financial Statements
Note 2. Related-Party Transactions
The Company provides various services (the Services) to related-party affiliates. The Services provided represent shared costs consisting of, but not limited to, employee and personnel services, accounting and financial management, legal and tax, human resources, information technology and participation under the Company's retirement, welfare and other benefit plans. The Services are performed for an amount equal to the direct costs incurred by the Company, plus allocated overhead costs based on management's estimation of services provided.
The costs associated with the Services have been allocated using the most meaningful respective allocation methodologies which were primarily based on proportionate revenue, headcount, or direct cost by the Company compared to the related-party affiliates.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–64)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, the company provides various services to its related-party affiliates, which include shared costs for employee and personnel services, accounting and financial management, legal and tax, human resources, information technology, and participation in the company's benefit plans. These services are charged at an amount equal to the direct costs incurred by Cicis, plus allocated overhead costs based on management's estimation of services provided.
The costs associated with these services are allocated using methodologies based on proportionate revenue, headcount, or direct cost by Cicis compared to its related-party affiliates. This means that the allocation of costs is determined by factors such as how much revenue each entity generates, the number of employees each entity has, or the direct costs that each entity incurs.
For prospective franchisees, this indicates that Cicis aims to distribute shared expenses among its related entities in a manner that reflects each entity's contribution to and utilization of these services. At the end of 2024 and 2023, Cicis had receivables from affiliates for these services amounting to $695,717 and $79,530, respectively. These amounts are recorded as related party receivables on the combined balance sheets, reflecting the billing and payment process for these services.