How do the bankruptcy filings described in Cicis's Item 4 potentially affect the franchisee's ability to obtain financing, given the statement in Item 10?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
U.S. Bankruptcy Court, Northern District of Texas (Dallas) Bankruptcy Petition: 21-30146-sgj11: On January 25, 2021, some of our current and former affiliates, namely, Cici's Holdings, Inc., Awesome Acquisition Company, CAC, CiCi Enterprises, CiCi GP, LLC, CiCi Services, JMC GP, LLC, JMC Restaurant Distribution, LP, and Pizza Parent, LLC, filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. All the debtors share our principal business address. On March 3, 2021, the court approved the debtors' and creditors' pre-packaged Plan of Reorganization, and March 10, 2021, CiCi Enterprises emerged from bankruptcy. On July 2, 2021, the bankruptcy cases against all the petitioners except Pizza Parent, LLC were closed. On August 30, 2024, the case was closed against Pizza Parent, LLC.
Other than this action, no bankruptcy is required to be disclosed in this Item.
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Item 4 discloses that on January 25, 2021, several of Cicis's current and former affiliates filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. While Cici Enterprises emerged from bankruptcy on March 10, 2021, and the cases were closed against most petitioners by July 2, 2021, the case against Pizza Parent, LLC, was not closed until August 30, 2024.
This history of bankruptcy filings by Cicis's affiliates could potentially affect a franchisee's ability to obtain financing. Lenders may view the prior bankruptcies as a sign of financial instability or increased risk, making them hesitant to provide loans or offering less favorable terms, such as higher interest rates or stricter repayment schedules. This is a common concern in franchising, as the financial health of the franchisor can impact the perceived risk of the franchise investment.
Item 10 of the FDD typically covers financing options, but the provided excerpts do not include Item 10. Therefore, it is not possible to determine from this document how Cicis addresses the impact of these bankruptcy filings on franchisee financing. A prospective franchisee should directly ask Cicis about any specific financing programs they offer, how the bankruptcy filings might affect a franchisee's ability to secure funding, and what steps Cicis has taken to mitigate any negative perceptions from lenders due to the past bankruptcies.