What is excluded from Cicis' 'Fee Based Net Sales' definition?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
"Fee Based Net Sales" means all sales, revenues, charges and receipts received by the restaurants in the Data Set including all business insurance proceeds, whether from cash, check, credit or debit card, gift cards, barter exchange, trade credit or other credit transactions, but excludes (i) sales tax and other related taxes collected from the customers and paid to the applicable federal, state, municipal, or local authority, (ii) any refunds made to customers, (iii) receipts from the sale of products from vending machines, and (iv) revenue that is generated from the operation of video game machines (including bulk machines). Except for the exclusion of revenue generated from the operation of video game machines, this is the same definition as "Net Sales" in the Franchise Agreement. In the Franchise Agreement, revenue generated from the operation of video game machines is included as part of your Net Sales, but we have historically not required, and do not currently require, that you include that revenue when calculating your Royalty, Fund Contributions, and other fee-based payments to us, although we reserve the right to do so in the future.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 53–58)
What This Means (2025 FDD)
According to Cicis' 2025 Franchise Disclosure Document, 'Fee Based Net Sales' encompasses all sales, revenues, charges, and receipts, including business insurance proceeds, from various transaction methods like cash, credit cards, and gift cards. However, the definition specifically excludes certain items. These exclusions are important for franchisees to understand because 'Fee Based Net Sales' is used to calculate royalty fees and other contributions to Cicis.
Specifically, Cicis excludes (i) sales tax and other related taxes collected from customers and remitted to governmental authorities, (ii) any refunds made to customers, (iii) receipts from the sale of products from vending machines, and (iv) revenue generated from the operation of video game machines (including bulk machines) from the 'Fee Based Net Sales' calculation. This means that franchisees do not pay royalties or fund contributions on these excluded revenues, which can impact their overall profitability and the amount of fees owed to Cicis.
It is important to note that, with the exception of revenue from video game machines, the definition of 'Fee Based Net Sales' is the same as 'Net Sales' in the Franchise Agreement. While the Franchise Agreement includes revenue from video game machines as part of Net Sales, Cicis has historically not required franchisees to include this revenue when calculating royalty, fund contributions, and other fee-based payments. However, Cicis retains the right to include video game revenue in these calculations in the future, which could increase the financial obligations of franchisees. A prospective franchisee should clarify with Cicis whether this policy is subject to change and how it might affect their financial planning.