What are the consequences of failing to comply with Cicis's System Standards described in Item 8, as they relate to the estimated initial investment costs outlined in Item 7?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee | 5% of Net Sales for a Cicis Buffet Restaurant; 6% of Net Sales for a Cicis To Go Restaurant (subject to reduction for participation in current incentive programs). | The day of the week we specify (currently, Thursday) | See Notes 2, 3, 4, and 5 |
| Non-Compliance Fee | $250 per failure to comply with the Franchise Agreement, plus, your royalty fee will increase by one (1) percentage point until you have cured all deficiencies | On demand, the day after non- compliance occurs | Payable only if you are in default of your obligations under the Franchise Agreement. |
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, failing to comply with the Franchise Agreement can lead to a "Non-Compliance Fee" of $250 for each instance. Additionally, the royalty fee, calculated as a percentage of net sales, will increase by one percentage point until all deficiencies are corrected.
These non-compliance fees and increased royalty fees can impact a franchisee's financial performance and potentially affect their ability to cover initial investment costs. Item 7 outlines various expenses that a franchisee will incur before opening, such as furniture, fixtures, equipment, POS systems, signage, insurance premiums, licenses, and initial inventory. Unexpected fees due to non-compliance can strain a franchisee's budget and delay their ability to achieve profitability.
It is important for prospective Cicis franchisees to carefully review the Franchise Agreement and understand the System Standards to avoid non-compliance and the associated fees. Maintaining compliance is crucial for managing costs and ensuring the long-term success of the franchise. Franchisees should also factor in potential non-compliance fees when estimating their initial investment and operating costs.