What is included in the 'Net Company Sales' calculation for Cicis restaurants?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
nue derived by the restaurants in the Data Set from the operation of the game room and video game machines.
- "Net Company Sales" is the sum of Fee Based Net Sales plus Game Room Sales.
- "COGS" means the aggregate delivered cost of food and beverage sold at the restaurant and related paper supplies.
- "Payroll Costs" is the total cost of salaries, wages, payroll taxes, and general liability insurance premium paid by the franchisees of the restaurants in the Data Set. It does not include any distributions of profits to owners or other non-employee related distributions.
- "Controllable Expenses" means the aggregate expenses for utilities, repairs & maintenance, smallwares, other store supplies, cleaning supplies, linen, uniforms, game room expenses, office supplies, trash removal, security, bank/credit card fees, sales tax adjustments, online delivery fees, and Local Marketing Spend incurred by the restaurants in the Data Set.
- "Advertising National" means the amount contributed to the Fund.
- "Non-Controllable Expenses" means the aggregate occupancy costs, property tax, and other taxes and related expenses incurred in the operation of the restaurants.
- "Restaurant EBITDA Before" means Net Company Sales minus COGS, Payroll Costs, Controllable Expenses, Advertising National, and Non-Controllable Expenses before deductions for the Royalty and the Technology and Support Fees actually paid by the restaurant.
- "Royalty Expenses" means the aggregate amount of royalty paid by the franchisee.
- "Technology and Support Fee" means the aggregate amount of technology fees actually paid to us by the franchisee.
- "Restaurant EBITDA After" means Restaurant EBITDA Before after deductions for the Royalty and the Technology and Support Fees actually paid by the restaurant.
- "Royalty Adjustment" is the difference between the average amount paid by the franchisees in the Data Set for Royalty Expense and the amount franchisees are required to pay under the current form Franchise Agreement (5%). The reason for the difference is that some franchisees in the Data Set are subject to older forms of Franchise Agreement that provided for a lower royalty rate than is provided for under the current form Franchise Agreement.
- "Technology and Support Fee" is the difference between the average amount paid by the franchisees in the Data Set for Technology and Support
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 53–58)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, 'Net Company Sales' is calculated by summing 'Fee Based Net Sales' and 'Game Room Sales'. 'Fee Based Net Sales' encompasses all revenues received by the restaurants, including proceeds from cash, checks, credit/debit cards, gift cards, and other credit transactions, as well as business insurance proceeds. However, it excludes sales tax remitted to governmental authorities, refunds to customers, receipts from vending machines, and revenue from video game machines. 'Game Room Sales' represents the total revenue generated from the operation of the game room and video game machines within the Cicis restaurant.
This definition is important for prospective franchisees as it clarifies what income is included when calculating key financial metrics. For example, the Item 19 financial performance representation uses 'Net Company Sales' to calculate percentages for expenses like COGS, payroll, and controllable expenses. Understanding the components of 'Net Company Sales' allows franchisees to accurately interpret the financial performance data provided in the FDD.
It's worth noting that while the Franchise Agreement includes revenue from video game machines as part of 'Net Sales', Cicis currently does not require franchisees to include this revenue when calculating royalty, fund contributions, and other fee-based payments. However, Cicis retains the right to change this practice in the future, which could impact a franchisee's financial obligations. Therefore, prospective franchisees should pay close attention to any changes in how royalties and other fees are calculated.