What was the change in Cicis' related party receivable in 2024?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2024 | 2023 | ||
|---|---|---|---|
| Cash flows from operating activities: | |||
| Net income | $ 4,210,079 | $ 5,859,705 | |
| Adjustments to reconcile net income to net cash provided by | |||
| operating activities: | |||
| Amortization | 57,149 | 38,816 | |
| Allowance for credit losses | 30,166 | - | |
| Changes in operating assets and liabilities: | |||
| Trade receivables | 4,787 | ( 139,264) | |
| Marketing fund, restricted | 142,369 | ( 981,151) | |
| Related party receivable | ( 616,187) | 753,587 | |
| Prepaid expenses and other current assets | ( 631,305) | 41,682 | |
| Other receivables | 46,123 | ( 2,952) | |
| Accounts payable | ( 413,045) | 305,641 | |
| Accounts payable—marketing fund, restricted | 68,880 | 182,889 | |
| Accrued expenses and other current liabilities | ( 115,228) | ( 754,380) | |
| Deferred franchise fees | 99,444 | 233,291 | |
| Related party payable | ( 596,796) | 427,267 | |
| Marketing fund liabilities, restricted | ( 423,715) | 1,407,044 | |
| Deferred initial beverage fund | ( 387,386) | ( 789,083) | |
| Net cash provided by operating activities | 1,475,335 | 6,583,092 | |
| Cash flows from investing activities: | |||
| Website | - | ( 120,000) | |
| Net cash used in investing activities | - | ( 120,000) | |
| Cash flows from financing activities: | |||
| Distributions to members | ( 2,889,567) | ( 8,300,000) | |
| Net cash used in financing activities | ( 2,889,567) | ( 8,300,000) | |
| Net decrease in cash, cash equivalents | |||
| and restricted cash | ( 1,414,232) | ( 1,836,908) | |
| Cash, cash equivalents and restricted cash: | |||
| Beginning | 3,703,166 | 5,540,074 | |
| Ending | $ 2,288,934 | $ 3,703,166 |
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis' 2025 Franchise Disclosure Document, the related party receivable decreased by $616,187 in 2024, compared to an increase of $753,587 in 2023. This represents the change in operating assets and liabilities related to transactions with parties related to Cicis.
For a prospective franchisee, this indicates the financial interactions Cicis has with its related parties and how these interactions changed year-over-year. Monitoring these receivables can provide insight into the financial health and stability of the company. A significant decrease in related party receivables could suggest changes in the financial relationships or transactions between Cicis and its related entities.
It's important to note that "related party" transactions are not inherently problematic, but they require careful scrutiny to ensure they are conducted at arm's length and do not unfairly benefit or disadvantage either party. Franchisees should seek clarification from Cicis regarding the nature of these related party transactions and their potential impact on the overall financial performance of the franchise system.