What is the relationship between the initial franchise fee for Cicis in Item 5 and the potential for non-compliance fees described in Item 6?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 5: INITIAL FEES]
ITEM 5 INITIAL FEES
All fees described in this Item 5 are uniform for all franchisees and are not refundable under any circumstances. Except for some amounts that are payable to JMC as described below, all other fees described in this Item 5 are payable in a lump sum.
Initial Franchise Fees: When you sign the Franchise Agreement, you must pay us an initial franchise fee of $30,000 for a Cicis Buffet Restaurant and $15,000 for a Cicis To Go Restaurant (subject to reduction under current incentive programs described below). The initial franchise fee is payable in a lump sum and is uniformly imposed (although we reserve the right to negotiate it at our discretion).
[Item 6: OTHER FEES]
| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee | 5% of Net Sales for a Cicis Buffet Restaurant; 6% of Net Sales for a Cicis To Go Restaurant (subject to reduction for participation in current incentive programs). | The day of the week we specify (currently, Thursday) | See Notes 2, 3, 4, and 5 |
| Non-Compliance Fee | $250 per failure to comply with the Franchise Agreement, plus, your royalty fee will increase by one (1) percentage point until you have cured all deficiencies | On demand, the day after non- compliance occurs | Payable only if you are in default of your obligations under the Franchise Agreement. |
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Item 5 details the initial franchise fee, while Item 6 outlines other fees, including a non-compliance fee. The initial franchise fee is a one-time payment due when signing the Franchise Agreement. For a Cicis Buffet Restaurant, this fee is $30,000, and for a Cicis To Go Restaurant, it is $15,000, though these amounts may be subject to reduction under current incentive programs. This fee is non-refundable. Item 6 describes a Non-Compliance Fee of $250 per failure to comply with the Franchise Agreement.
The non-compliance fee is separate from the initial franchise fee and is only imposed if the franchisee fails to meet the obligations outlined in the Franchise Agreement. In addition to the $250 non-compliance fee, Cicis will increase the royalty fee by one percentage point until the franchisee corrects all deficiencies. The royalty fee is 5% of Net Sales for a Cicis Buffet Restaurant or 6% of Net Sales for a Cicis To Go Restaurant.
Therefore, while the initial franchise fee grants the franchisee the right to operate a Cicis restaurant, the non-compliance fee is a penalty for failing to adhere to the terms of the Franchise Agreement. The initial franchise fee is a one-time, upfront cost, whereas the non-compliance fee is contingent and ongoing until the franchisee resolves the issues. Prospective franchisees should understand the terms of the Franchise Agreement to avoid incurring non-compliance fees, which can significantly impact their operating costs due to the additional royalty fee percentage.