What is included in Cicis' 'Fee Based Net Sales' definition?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
As used in the following Tables:
"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's 2025 Franchise Disclosure Document, 'Fee Based Net Sales' encompasses all revenues received by the restaurants within the data set. This includes sales from cash, checks, credit or debit cards, gift cards, barter exchange, trade credit, or other credit transactions, as well as business insurance proceeds. However, there are specific exclusions from this definition.
Specifically, 'Fee Based Net Sales' excludes sales tax and other related taxes collected from customers and remitted to governmental authorities. It also excludes any refunds made to customers and receipts from the sale of products from vending machines. Furthermore, revenue generated from the operation of video game machines is excluded from 'Fee Based Net Sales' for the purpose of calculating royalty, fund contributions, and other fee-based payments to Cicis. However, the document clarifies that in the Franchise Agreement, revenue from video game machines is included in 'Net Sales,' though Cicis historically has not required franchisees to include this revenue when calculating payments, but reserves the right to do so in the future.
For a prospective franchisee, understanding this definition is crucial because it directly impacts the calculation of royalties and other fees payable to Cicis. While revenue from video games is currently excluded from the 'Fee Based Net Sales' calculation, Cicis retains the right to include it in the future, which could increase the franchisee's financial obligations. Therefore, franchisees should pay close attention to any changes in the definition of 'Fee Based Net Sales' as outlined in their Franchise Agreement and any subsequent amendments.