How does Cicis's Item 1, defining the franchisor, relate to the bankruptcy filings described in Item 4?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchises for Cicis Restaurants, as described in this Disclosure Document, were offered and sold by our indirect parent, CiCi Enterprises, from September 2003 until April 2021. As of the issuance date of this Disclosure Document, CiCi Enterprises is the franchisor under 133 existing Franchise Agreements (as defined below) for Cicis restaurants. As those Franchise Agreements are transferred or renewed, the franchisees execute new form Franchise Agreements with us. Pursuant to a Service Agreement, we perform all of CiCi Enterprises' obligations under Franchise Agreements to which it is a party. CiCi Enterprises has never operated a business similar to what you will operate and has never offered franchises in any other line of business.
U.S. Bankruptcy Court, Northern District of Texas (Dallas) Bankruptcy Petition: 21-30146-sgj11: On January 25, 2021, some of our current and former affiliates, namely, Cici's Holdings, Inc., Awesome Acquisition Company, CAC, CiCi Enterprises, CiCi GP, LLC, CiCi Services, JMC GP, LLC, JMC Restaurant Distribution, LP, and Pizza Parent, LLC, filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. All the debtors share our principal business address. On March 3, 2021, the court approved the debtors' and creditors' pre-packaged Plan of Reorganization, and March 10, 2021, CiCi Enterprises emerged from bankruptcy. On July 2, 2021, the bankruptcy cases against all the petitioners except Pizza Parent, LLC were closed. On August 30, 2024, the case was closed against Pizza Parent, LLC.
We are a limited liability company, formed in Delaware on February 16, 2021. Our principal business address is 13355 Noel Road, Suite 1645, Dallas, TX 75240. Our sole business is to offer, sell and service the franchises described in this Disclosure Document, and we do not offer franchises in any other line of business. We do not conduct business under any names except our legal name and "Cicis" or "Cicis Pizza." We have never operated any other businesses, including the type being franchised, or offered franchises in any other line of business. We began offering franchises for Cicis Restaurants as of May 28, 2021.
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Item 1 identifies On Smile LLC as the current franchisor, while also detailing the roles and relationships of its parents, predecessors, and affiliates. Specifically, it mentions that franchises were offered and sold by CiCi Enterprises until April 2021, and that as of the issuance date of the document, CiCi Enterprises still acts as the franchisor under 133 existing Franchise Agreements. On Smile LLC performs CiCi Enterprises' obligations under these agreements. This is relevant to Item 4, which discloses that CiCi Enterprises, along with several current and former affiliates, filed for Chapter 11 bankruptcy on January 25, 2021. CiCi Enterprises emerged from bankruptcy on March 10, 2021, and the bankruptcy case was closed on July 2, 2021.
The relationship between Item 1 and Item 4 highlights a transition in the Cicis franchise system. While On Smile LLC is the current franchisor, the bankruptcy filing involved CiCi Enterprises, the former franchisor, and other related entities. This means that franchisees who signed agreements with CiCi Enterprises before April 2021 were potentially affected by the bankruptcy proceedings. The disclosure in Item 4 provides important context about the financial stability and restructuring of the Cicis franchise system, particularly concerning the entities that were previously involved in franchising the brand.
For a prospective franchisee, this information is crucial for understanding the history and evolution of the Cicis franchise. It is important to note that the bankruptcy filing occurred before On Smile LLC began offering franchises in May 2021. However, the fact that CiCi Enterprises still has existing franchise agreements and that On Smile LLC services these agreements suggests an ongoing connection between the current and former franchisors. A potential franchisee should investigate the implications of this history, including any potential liabilities or benefits arising from the previous bankruptcy, and how On Smile LLC's management and financial practices differ from those of CiCi Enterprises. Understanding the details of the bankruptcy and the subsequent reorganization can help a franchisee assess the stability and future prospects of the Cicis franchise system.