How do the bankruptcy filings described in Cicis's Item 4 potentially affect the franchisor's ability to provide the assistance outlined in Item 11?
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.
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. These affiliates included 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. CiCi Enterprises emerged from bankruptcy on March 10, 2021, and the cases against all petitioners except Pizza Parent, LLC were closed on July 2, 2021. The case against Pizza Parent, LLC, was closed on August 30, 2024.
These past bankruptcy filings could potentially impact Cicis's ability to provide the assistance, advertising, computer systems, and training outlined in Item 11. While the company has emerged from bankruptcy, the financial strain and reorganization process could have depleted resources or altered operational priorities. This could affect Cicis's capacity to fully deliver on its obligations to provide site selection assistance, architectural plans, training programs, marketing support, and ongoing operational guidance to franchisees.
Prospective franchisees should carefully consider the implications of these past bankruptcy filings and conduct thorough due diligence to assess Cicis's current financial stability and its ability to meet its commitments. It would be prudent to inquire about specific measures Cicis has taken to ensure that its support systems and resources are adequate to support new and existing franchisees, despite the challenges posed by the bankruptcy proceedings. Additionally, franchisees should seek clarification on how the bankruptcy has affected the marketing fund and the franchisor's ability to administer it effectively, as franchisees are required to contribute 5% of their Net Sales to this fund.