Does the definition of 'Net Sales' for Cicis include insurance proceeds received due to business interruption?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
E. Net Sales. "Net Sales" means all sales, revenues, charges and receipts received by you from your Restaurant or attributed to your Restaurant, including all revenue that is generated from the operation of any video game machines (including bulk machines) located at your Restaurant, whether from cash, check, credit or debit card, gift cards, barter exchange, trade credit or other credit transactions, or any other forms of payment, but excludes (i) Sales Tax (as defined below), (ii) any refunds made for your customers, and (iii) receipts from the sale of products from vending machines located at your Restaurant.
Net Sales includes all insurance proceeds you receive to replace revenue that you lose from the interruption of your Restaurant due to a casualty or other event covered by business interruption or similar insurance coverage. "Sales Tax" means all taxes collected directly from customers, based upon present or future Law, collected by you in the operation of your Restaurant, and any other tax, excise, or duty which is levied or assessed against you by any federal, state, municipal, or local authority, based on sales of specific merchandise sold at or from your Restaurant, provided that such taxes are actually transmitted to the appropriate taxing authority.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Net Sales include all sales, revenues, charges, and receipts from the restaurant. This encompasses revenue from video game machines, and various forms of payment such as cash, credit cards, and gift cards.
Importantly, the definition of Net Sales for Cicis also explicitly includes "all insurance proceeds you receive to replace revenue that you lose from the interruption of your Restaurant due to a casualty or other event covered by business interruption or similar insurance coverage." This means that if a Cicis restaurant experiences a business interruption (e.g., due to a fire or natural disaster) and receives insurance money to cover lost revenue, those insurance proceeds are considered part of Net Sales.
However, the definition of Net Sales does exclude a few specific items: sales tax collected directly from customers, refunds made to customers, and receipts from vending machines. The inclusion of business interruption insurance proceeds in Net Sales has a direct impact on the royalty fees and marketing contributions a franchisee must pay, as these are calculated as a percentage of Net Sales. Therefore, a franchisee's financial obligations to Cicis could be higher during periods when the restaurant is recovering from an interruption and receiving insurance payments.