How long is the term over which Cicis recognizes initial and renewal franchise fees?

According to Cicis's 2025 Franchise Disclosure Document, both initial and renewal franchise fees are recognized as revenue on a straight-line basis. This revenue recognition occurs over the term of the franchise agreement, which ranges from five to ten years, beginning when the restaurant opens.

This means that Cicis does not recognize the entire initial or renewal franchise fee as revenue immediately upon payment. Instead, they spread the recognition of the revenue over the duration of the franchise agreement. For example, if the initial franchise fee is $50,000 and the agreement term is 10 years, Cicis would recognize $5,000 of revenue each year.

For a prospective franchisee, this accounting practice has no direct financial impact on their operations. However, it provides insight into how Cicis manages its revenue and financial reporting. Payments received before the restaurant opens are recorded as deferred revenue, meaning Cicis holds onto this revenue as a liability until it is earned, which is when the restaurant opens and the franchise term begins.