How does Cicis recognize consideration received from vendors based on the dollar volume of purchases?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
s production costs are incurred and paid in the current year for the next year's advertising campaign. In those instances, production costs are recorded as prepaid expenses and then expensed in the subsequent fiscal year.
Consideration from vendors: The Company has entered into beverage supply agreements with certain major vendors. Pursuant to the terms of these arrangements, consideration is provided to the Company for the benefit of the Marketing Fund from the vendors, based upon the dollar volume of purchases for company-operated restaurants and franchised restaurants. In accordance with U.S. GAAP governing consideration received from vendors, these amounts are recognized as earned throughout the year and are classified in the combined statements of income within revenue with an offset included
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–64)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Cicis has agreements with major beverage vendors where consideration is provided to Cicis for the benefit of the Marketing Fund. This consideration is directly tied to the dollar volume of purchases made by both company-operated and franchised Cicis restaurants.
Cicis recognizes these amounts as they are earned throughout the year. This means that as Cicis restaurants (both company-owned and franchised) purchase more beverages from these vendors, Cicis recognizes a corresponding amount of revenue. This revenue is then classified within the combined statements of income.
To offset this revenue, Cicis includes a corresponding amount in marketing general and administrative costs, representing contributions to the marketing fund. This indicates that the rebates received from vendors are directly allocated to the marketing fund, which is used for advertising, public relations, and other activities to benefit the Cicis brand. In 2024 and 2023, Cicis received rebates amounting to $7,907,088 and $8,874,070, respectively.