How does Cicis classify consideration received from vendors in its combined statements of income?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
s production costs are incurred and paid in the current year for the next year's advertising campaign. In those instances, production costs are recorded as prepaid expenses and then expensed in the subsequent fiscal year.
Consideration from vendors: The Company has entered into beverage supply agreements with certain major vendors. Pursuant to the terms of these arrangements, consideration is provided to the Company for the benefit of the Marketing Fund from the vendors, based upon the dollar volume of purchases for company-operated restaurants and franchised restaurants. In accordance with U.S. GAAP governing consideration received from vendors, these amounts are recognized as earned throughout the year and are classified in the combined statements of income within revenue with an offset included
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–64)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, consideration received from vendors through beverage supply agreements is classified within revenue on the combined statements of income. This revenue is then offset by an amount included in marketing general and administrative costs, which represents contributions to the marketing fund. These vendor contributions are based on the dollar volume of purchases made by both company-operated and franchised Cicis restaurants.
For example, in the year ending December 31, 2024, Cicis received rebates amounting to $7,907,088, and in the year ending December 31, 2023, they received $8,874,070. These rebates are a direct result of agreements with major beverage vendors, where consideration is given to Cicis for the benefit of the marketing fund. This accounting treatment ensures that the revenue from vendor rebates is directly linked to the marketing efforts of the company.
This accounting practice is beneficial for Cicis franchisees because it directly supports the marketing fund, which is used for advertising, public relations, and other activities aimed at increasing sales and enhancing the brand's public reputation. By classifying these vendor contributions as revenue with a corresponding offset in marketing expenses, Cicis provides transparency in how these funds are being used to support the overall franchise system. This also aligns with U.S. GAAP standards for recognizing consideration received from vendors.