What was the amount of marketing fund liabilities, restricted, for Cicis in 2022?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2023 | 2022 | ||
|---|---|---|---|
| Cash flows from operating activities: | |||
| Net income | $ 5,859,705 | $ 9,407,023 | |
| Adjustments to reconcile net income to net cash | |||
| provided by operating activities: | |||
| Amortization | 13,149 | 13,149 | |
| Changes in operating assets and liabilities: | |||
| Trade receivables | 186,610 | (73,448) | |
| Marketing fund, restricted | (1,307,025) | 1,045,443 | |
| Related party receivable | 753,587 | (502,090) | |
| Prepaid expenses and other current assets | 41,682 | 532,467 | |
| Other receivables | (2,952) | 226,453 | |
| Accounts payable | 305,641 | 90,785 | |
| Accounts payable—marketing fund, restricted | 182,889 | (636,450) | |
| Accrued expenses and other current liabilities | (754,380) | 668,395 | |
| Deferred franchise fees | 233,291 | 325,663 | |
| Related party payable | 427,267 | (49,523) | |
| Marketing fund liabilities, restricted | 1,407,044 | (2,623,924) | |
| Other noncurrent liabilities | (789,083) | (775,153) | |
| Net cash provided by operating activities | 6,557,425 | 7,648,790 | |
| Cash flows from investing activities: | |||
| Website in development | (94,333) | (100,000) | |
| Net cash used in investing activities | (94,333) | (100,000) | |
| Cash flows from financing activities: | |||
| Distributions to members | (8,300,000) | (7,277,500) | |
| Net cash used in financing activities | (8,300,000) | (7,277,500) | |
| Net (decrease) increase in cash, cash equivalents | |||
| and restricted cash | (1,836,908) | 271,290 | |
| Cash, cash equivalents and restricted cash: | |||
| Beginning of year | 5,540,074 | 5,268,784 | |
| End of year | $ 3,703,166 | $ 5,540,074 |
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, the marketing fund liabilities, restricted, in 2022 was a negative value of $2,623,924. This figure reflects the changes in operating assets and liabilities related to the marketing fund. This indicates the extent to which Cicis's marketing fund obligations exceeded its available assets at that time.
This liability represents funds that Cicis's franchisees have contributed for marketing purposes but have not yet been used or allocated. The negative value suggests that Cicis had a shortfall in its marketing fund, meaning it had spent more than it had collected or had outstanding obligations exceeding its current assets within the fund. This could be due to various factors, such as timing differences between revenue collection and expense payments, or strategic decisions to invest in marketing initiatives ahead of revenue inflows.
For a prospective franchisee, this information is crucial as it provides insight into the financial management of the marketing fund. It is important to understand how Cicis manages and utilizes these funds, as the effectiveness of marketing efforts directly impacts the success of individual franchise locations. A franchisee should inquire about the reasons behind the liability, the plans to address it, and the potential impact on future marketing activities. Understanding the franchisor's financial management practices can help a franchisee assess the overall stability and transparency of the franchise system.