For income tax purposes, how are Smile and CiCi Services taxed?

According to Cicis's 2025 Franchise Disclosure Document, On Smile and CiCi Services have elected to be taxed as a partnership under the Internal Revenue Code and similar state laws. This means that instead of the companies themselves paying income taxes, the responsibility for the company's taxable income falls on the members (owners or partners) of each company.

For a prospective Cicis franchisee, this information is relevant because it clarifies the tax structure of the entities they are franchising with. It's important to understand that Cicis, as a franchisor, has chosen a pass-through taxation method for these specific entities. This structure avoids double taxation, where the company pays taxes on its profits, and then the owners pay taxes again when they receive distributions.

Instead, the profits and losses of On Smile and CiCi Services are passed through directly to their members' individual tax returns. The members then pay income tax at their individual income tax rates. Franchisees should consult with a tax advisor to understand the full implications of this partnership tax structure and how it might affect their own tax liabilities and financial planning.