What is the purpose of the Underperforming Incentive Program Addendum for Cicis franchisees?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
| Current assets: | |||
|---|---|---|---|
| Cash and cash equivalents | $ 1,854,735 | $ 2,931,372 | |
| Cash and cash equivalents—marketing fund, restricted | 434,199 | 771,794 | |
| Accounts receivable, net: | |||
| Trade receivables | 290,921 | 325,874 | |
| Marketing fund, restricted | 2,395,119 | 2,537,488 | |
| Related party receivable | 695,717 | 79,530 | |
| Prepaid expenses and other current assets | 859,866 | 228,561 | |
| Total current assets | 6,530,557 | 6,874,619 | |
| Other receivables | 12,638 | 58,761 | |
| Website, net | 150,333 | 194,333 | |
| Intangible assets, net | 98,719 | 109,488 | |
| Goodwill, net | 14,678 | 17,058 | |
| Total noncurrent assets | 276,368 | 379,640 | |
| Total assets | $ 6,806,925 | $ 7,254,259 |
ATTACHMENT A
DEVELOPMENT INCENTIVE PROGRAM ADDENDUM (Franchise Agreement)
DEVELOPMENT INCENTIVE PROGRAM ADDENDUM
(Franchise Agreement)
On Smile LLC ("we") and the "Franchisee" identified below ("you" and, together with us, the "Parties") execute this Development Incentive Program Addendum (the "Addendum") to supplement and amend that certain Franchise Agreement they have executed immediately prior to the execution of this Addendum (as it might have otherwise been amended, the "Franchise Agreement"). The Franchise Agreement was executed pursuant to a Development Agreement between us and you or your affiliate (the "Development Agreement"). The "Effective Date" of this Addendum is the same as the Effective Date of the Franchise Agreement. Capitalized terms used but not defined in this Addendum have the meanings given them in the Franchise Agreement. For valuable consideration, receipt and sufficiency of which are acknowledged, the Parties agree as follows:
- Reduction of Initial Franchise Fee. Section 4.A of the Franchise Agreement is supplemented and amended by adding the following to the end of the Section:
While you are approved to participate in the Program and provided you and your affiliates remain in good standing, we agree that the Initial Franchise Fee shall be reduced to $10,000. We reserve the right to revoke the foregoing reduction at any time you are no longer approved to participate in the Program or you cease to be in good standing, in which case, you will pay us the balance of the full Initial Franchise Fee which, absent the foregoing reduction, is required under the Franchise Agreement. "Good Standing" means that you and your affiliates, as applicable, are in compliance with all material obligations under this Agreement, the Development Agreement (including the Development Schedule thereunder), and all other agreements between us and you or them, whether or not executed pursuant to the Development Agreement.
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to the 2025 Cicis Franchise Disclosure Document, the Underperforming Incentive Program Addendum is designed to supplement and amend the existing Franchise Agreement between On Smile LLC (Cicis) and the franchisee. The addendum is initiated when a franchisee applies for and is approved to participate in the Underperforming Incentive Program. By signing this addendum, the franchisee confirms the accuracy of the information provided in their program application and their qualification for the program, as well as their status as being in 'Good Standing'.
One key benefit of the Underperforming Incentive Program Addendum is the potential reimbursement of grand opening promotion expenses. If a franchisee conducts a grand opening promotion approved by Cicis in connection with their restaurant's purchase or re-opening, Cicis may reimburse the expenses incurred, up to the amount of the Renewal Fee paid when the Franchise Agreement was signed. This reimbursement excludes salaries and benefits paid to the franchisee's owners or employees, and the franchisee must submit documentary proof of the paid expenses within 30 days of the promotion's completion. Cicis retains the right to determine which expenses qualify for reimbursement.
Furthermore, the Underperforming Incentive Program Addendum modifies the royalty fees outlined in the original Franchise Agreement. For franchisees in good standing participating in the program, the royalty fees are adjusted as follows: 2% of Net Sales from the Effective Date through the day preceding the first anniversary, 3% of Net Sales from the first to the second anniversary of the Effective Date, and thereafter, the rate specified in the original Franchise Agreement. This modification aims to provide financial relief to underperforming franchisees, allowing them to potentially improve their financial standing during the initial years of the addendum.