How does Cicis handle gift card redemptions?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
Gift cards: The Company records a liability in the period in which a gift card is sold. As gift cards are redeemed, the Company reimburses the restaurant for the gift card value and derecognizes the related liability. When a gift card is not subject to escheatment, and it is probable that a portion of a gift card will not be redeemed, this amount is considered breakage and recognized within other general and administrative expenses. Breakage is recognized consistent with the historic redemption patterns of the associated gift cards. In addition, the Company incurs various expenses in operating the gift card program, including fees on gift cards that are sold through third-party retailers. These fees are recognized as incurred.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–64)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, the company records a liability when a gift card is sold. When these gift cards are redeemed at a Cicis restaurant, Cicis reimburses the restaurant for the gift card's value and removes the corresponding liability from its books.
Additionally, Cicis addresses the possibility that some gift cards may never be redeemed. If a gift card is not subject to escheatment laws (which require unclaimed property to be turned over to the state) and it's likely that a portion of the gift card will not be used, Cicis considers this unredeemed amount as "breakage." This breakage is then recognized as part of the company's general and administrative expenses. The amount of breakage recognized is determined by looking at the historical redemption patterns of similar gift cards.
Finally, Cicis incurs expenses related to operating the gift card program, such as fees for gift cards sold through third-party retailers. These fees are recognized as expenses when they are incurred.