What is the payment schedule for the purchase price of the Option Assets acquired by Cicis?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
- (3) Unless otherwise mutually agreed by us and you, the purchase price (minus customary pro ratas, including utilities and taxes, and minus the pay-off of any existing mortgage liens), if applicable, will be paid as follows: 10% at the time of closing and the remainder in 60 equal monthly installments of principal plus interest at a rate of interest per annum equal to the prime lending rate charged by Wells Fargo National Association or its successors in interest, determined as of the closing date with annual adjustments based on the prime rate charged on each anniversary date.
The first payment will be due on the first day of the second calendar month following closing and the remaining payments on the first day of each month thereafter.
On the first payment date,
interest from the date of closing will also be paid. The purchase price will be allocated among the Option Assets in the manner we prescribe.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, the payment schedule for the purchase price of Option Assets is as follows: Unless otherwise agreed upon by Cicis and the franchisee, 10% of the purchase price is due at the time of closing. The remaining balance will be paid in 60 equal monthly installments, which include principal plus interest. The interest rate is determined per annum, equivalent to the prime lending rate charged by Wells Fargo National Association or its successors, determined as of the closing date, with annual adjustments based on the prime rate charged on each anniversary date.
The first payment is due on the first day of the second calendar month following the closing date. Subsequent payments are due on the first day of each month thereafter. The first payment will also include interest accrued from the date of closing. Cicis determines how the purchase price is allocated among the Option Assets.
This payment schedule provides a structured approach for franchisees to manage the financial obligations when Cicis exercises its option to acquire assets. The initial 10% payment at closing provides Cicis with immediate funds, while the remaining balance is paid over five years. The interest rate is tied to the prime lending rate, which can fluctuate, impacting the total cost of the assets over time. Franchisees should consider the potential for interest rate changes when evaluating the financial implications of this payment schedule.