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How does Cicis's Item 9, regarding franchisee obligations, relate to the potential for non-compliance fees as outlined in Item 6?

Cicis Franchise · 2025 FDD

Answer from 2025 FDD Document

Type of Fee(1) Amount Due Date Remarks
Royalty Fee 5% of Net Sales for a Cicis Buffet Restaurant; 6% of Net Sales for a Cicis To Go Restaurant (subject to reduction for participation in current incentive programs). The day of the week we specify (currently, Thursday) See Notes 2, 3, 4, and 5
Non-Compliance Fee $250 per failure to comply with the Franchise Agreement, plus, your royalty fee will increase by one (1) percentage point until you have cured all deficiencies On demand, the day after non- compliance occurs Payable only if you are in default of your obligations under the Franchise Agreement.
Technology and Support Fee $100 per month When billed (currently, first day of the month) The Technology and Support Fee is in addition to all direct out-of-pocket costs you must otherwise incur under the terms of the Franchise Agreement or the Manual to acquire and maintain the required computer system and technology.
Type of Fee(1) Amount Due Date Remarks
--- --- --- ---
Cost of Updating Cicis Approved POS System $1,200 annually When billed Your total cost of updating Cicis Approved POS System will be approximately $3,000 to $4,800, annually, of which $1,200 shall be payable to us or our affiliates
Obligation Section in Agreement Disclosure Document item
a. Franchise Agreement – Items 8 and 11
Site selection and Section 1.B.
acquisition/lease Area Development Agreement – Section 2.D.
b. Franchise Agreement – Items 5, 6, 7, 8, 9,
Pre-opening Section 6
purchases/leases Area Development Agreement – N/A and 11
c. Site development and other pre-opening Franchise Agreement - Sections 2, 5.D., 5.E., and 5.F. Items 7, 8, and 11
requirements Area Development Agreement – N/A
Obligation Section in Agreement Disclosure Document item
-------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ -----------------------------
d. Franchise Agreement - Items 6 and 11
Initial and ongoing Sections 4.B. and
training 5.F. Area Development Agreement – N/A
e. Franchise Agreement - Items 7 and 11
Opening Section 2.C. Area Development Agreement – Section 2
f. Fees Franchise Agreement – Section 4 and Reopen Incentive Addendum, Underperforming Incentive Addendum, Development Incentive Addendum, and Veteran's Incentive Addendum Area Development Agreement – Section 3, Development Incentive Addendum, and Veteran's Incentive Addendum Items 5, 6, 7, 8, and 11
g. Franchise Agreement - Items 8, 11, 14, and
Compliance with Section 6
standards and policies/Operating Manual Area Development Agreement – N/A 16
h. Franchise Agreement - Items 11, 13, and
Trademarks and Section 8 14
proprietary Area Development Agreement –
information N/A
i. Franchise Agreement - Items 8 and 16
Restrictions on Sections 6.D, 6.E.,
products/services and 6.F.
offered Area Development Agreement – N/A
j. Franchise Agreement - Item 8
Warranty and Section 6.D. and
customer service 6.F.
requirements Area Development Agreement – N/A
k. Territorial development and sales Franchise Agreement – N/A Item 12
quotas Area Development Agreement - Section 2
l. Franchise Agreement – Item 8
Ongoing Section 6
product/service Area Development Agreement –
purchases N/A
m. Maintenance, appearance and remodeling requirements Franchise Agreement - Sections 2, 6.A. and 6.B., and Reopen Incentive Addendum Area Development Agreement – N/A Items 8, 11, 16, and 17
n. Franchise Agreement – Items 7 and 8
Insurance Section 11
Obligation Section in Agreement Disclosure Document item
------------------------------------------- -------------------------------------------------------------------- -----------------------------
Area Development Agreement – N/A
o. Franchise Agreement – Items 6, 8, and 11
Advertising Section 7 Area Development Agreement – N/A
p. Indemnification Franchise Agreement – Section 14 Area Development Agreement – Section 8.B. Item 6
q. Owner's participation/managem Franchise Agreement – Sections 5.C., 5.D. and 5.E. Items 1, 11, and 15
ent/staffing Area Development Agreement – Section 1.B.
r. Franchise Agreement – Item 6
Records and reports Section 10 Area Development Agreement – Section 4
s. Franchise Agreement –Sections 1.B., 2.B., Items 6, 8, and 11
Inspections and audits 6.F., and 10.C. Area Development Agreement – N/A
t. Franchise Agreement – Items 6 and 17
Transfer Section 13 Area Development Agreement – Section 5
u. Renewal (or Extension of Rights) Franchise Agreement – Section 3.B. of Franchise Agreement Area Development Agreement – N/A Items 6 and 17
v. Franchise Agreement - Items 6 and 17
Post-termination Section 16
obligations Area Development Agreement – Section 7
w. Franchise Agreement - Item 17
Noncompetition Sections 9.C. and
covenants 16.H. Area Development Agreement -N/A
x. Dispute resolution Franchise Agreement - Section 17.E., 17.F., and 17.G. Area Development Agreement – Section 9 Items 6 and 17
y. Franchise Agreement –
Guarantee Attachment B
Obligation Section in Agreement Disclosure Document item
------------ ------------------------------ -----------------------------
Area Development Agreement – Special Risk
sheet,
Attachment B Items 1 and 15

What This Means (2025 FDD)

According to Cicis's 2025 Franchise Disclosure Document, Item 9 outlines a franchisee's obligations, and failure to meet these obligations can result in non-compliance fees as detailed in Item 6. Item 9 provides a comprehensive list of franchisee obligations, referencing specific sections within the Franchise Agreement and related Disclosure Document items. These obligations span various aspects of the Cicis franchise operation, including site selection, pre-opening activities, training, fees, compliance with standards, and advertising.

Item 6 specifies that a "Non-Compliance Fee" of $250 is levied for each failure to comply with the Franchise Agreement. Additionally, the royalty fee will increase by one percentage point until all deficiencies are resolved. This fee is due the day after non-compliance occurs and is payable only if the franchisee is in default of their obligations under the Franchise Agreement. Therefore, if a Cicis franchisee fails to meet any of the obligations listed in Item 9, they risk incurring this non-compliance fee and an increase in their royalty fee.

For example, if a franchisee fails to maintain the appearance of the restaurant as required by Sections 2, 6.A. and 6.B. of the Franchise Agreement (referenced in Item 9), Cicis could deem this a breach of the Franchise Agreement and impose the $250 non-compliance fee. Similarly, failure to adhere to advertising requirements outlined in Section 7 of the Franchise Agreement, or failure to maintain adequate insurance as per Section 11, could trigger the same penalty. Prospective franchisees should carefully review Item 9 in conjunction with Item 6 to fully understand their obligations and the potential financial consequences of non-compliance. Understanding these obligations is crucial for avoiding penalties and maintaining a successful Cicis franchise.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.
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