Is Cicis obligated to spend funds received from approved suppliers in any particular manner?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
Purchasing Arrangements & Rebates
We and our affiliates may profit or derive revenue or other benefits from your purchases from approved or designated suppliers, and we and/or our affiliates may receive payments, fees, commissions, or reimbursements from approved or designated suppliers in respect of your purchases. If we do, neither we nor our affiliates will be obligated to spend funds received from approved suppliers nor will we or they be bound to spend such funds in any particular manner or for any particular purpose (unless provided in the agreement with the approved supplier). We receive vendor rebates in the range of $0.10 to $26 per unit purchased from food and supplies vendors based on franchisee purchases of Operating Assets. We or our affiliates may negotiate purchase arrangements, including prices and terms, with designated and approved suppliers on behalf of Cicis Restaurants.
During the 2024 fiscal year, we did not receive any revenue from the sale or lease of goods and services to our franchisees; however, (i) we received rebates amounting to $9,752,184 from our designated suppliers, representing 22.92% of our total revenue of $42,546,700 for that fiscal year; and (ii) JMC received $108,660,523 from the sale or lease of products or services to franchisees.
As of the date of this Disclosure Document, you do not have to participate in any purchasing or distribution cooperative. We do not provide material benefits to franchisees based on their purchase of particular products or services or use of particular suppliers.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 25–28)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, neither Cicis nor its affiliates are obligated to spend funds received from approved suppliers in any specific way, unless there is an agreement stating otherwise with the supplier. Cicis and its affiliates may receive payments, fees, commissions, or reimbursements from these suppliers based on franchisee purchases.
During the 2024 fiscal year, Cicis received rebates amounting to $9,752,184 from designated suppliers, which represented 22.92% of their total revenue of $42,546,700 for that year. JMC, an affiliate, received $108,660,523 from the sale or lease of products or services to franchisees. This demonstrates the potential financial benefits Cicis and its affiliates can derive from purchasing arrangements with suppliers.
For a prospective franchisee, this means that Cicis has considerable latitude in how it uses the rebates and other financial benefits it receives from suppliers. While these arrangements can contribute significantly to Cicis's revenue, there is no guarantee that these funds will be reinvested in ways that directly benefit franchisees. It is important for potential franchisees to understand the scale of these financial relationships and how they might influence Cicis's decisions regarding supplier selection and product standards. Franchisees are required to purchase between 90% to 95% of the total cost incurred in establishing and operating their Cicis Restaurant from approved or designated suppliers.