What is the relationship between the royalty fee structure for Cicis in Item 6 and the franchisee's obligations outlined in Item 9?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
ther items of this disclosure document.**
| Obligation | Section in Agreement | Disclosure Document item |
|---|---|---|
| a. | Franchise Agreement – | Items 8 and 11 |
| Site selection and | Section 1.B. | |
| acquisition/lease | Area Development Agreement – Section 2.D. | |
| b. | Franchise Agreement – | Items 5, 6, 7, 8, 9, |
| Pre-opening | Section 6 | |
| purchases/leases | Area Development Agreement – N/A | and 11 |
| c. Site development and other pre-opening | Franchise Agreement - Sections 2, 5.D., 5.E., and 5.F. | Items 7, 8, and 11 |
| requirements | Area Development Agreement – N/A | |
| Obligation | Section in Agreement | Disclosure Document item |
| -------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------- |
| d. | Franchise Agreement - | Items 6 and 11 |
| Initial and ongoing | Sections 4.B. and | |
| training | 5.F. Area Development Agreement – N/A | |
| e. | Franchise Agreement - | Items 7 and 11 |
| Opening | Section 2.C. Area Development Agreement – Section 2 | |
| f. Fees | Franchise Agreement – Section 4 and Reopen Incentive Addendum, Underperforming Incentive Addendum, Development Incentive Addendum, and Veteran's Incentive Addendum Area Development Agreement – Section 3, Development Incentive Addendum, and Veteran's Incentive Addendum | Items 5, 6, 7, 8, and 11 |
| g. | Franchise Agreement - | Items 8, 11, 14, and |
| Compliance with | Section 6 | |
| standards and policies/Operating Manual | Area Development Agreement – N/A | 16 |
| h. | Franchise Agreement - | Items 11, 13, and |
| Trademarks and | Section 8 | 14 |
| proprietary | Area Development Agreement – | |
| information | N/A | |
| i. | Franchise Agreement - | Items 8 and 16 |
| Restrictions on | Sections 6.D, 6.E., | |
| products/services | and 6.F. | |
| offered | Area Development Agreement – N/A | |
| j. | Franchise Agreement - | Item 8 |
| Warranty and | Section 6.D. and | |
| customer service | 6.F. | |
| requirements | Area Development Agreement – N/A | |
| k. Territorial development and sales | Franchise Agreement – N/A | Item 12 |
| quotas | Area Development Agreement - Section 2 | |
| l. | Franchise Agreement – | Item 8 |
| Ongoing | Section 6 | |
| product/service | Area Development Agreement – | |
| purchases | N/A | |
| m. Maintenance, appearance and remodeling requirements | Franchise Agreement - Sections 2, 6.A. and 6.B., and Reopen Incentive Addendum Area Development Agreement – N/A | Items 8, 11, 16, and 17 |
| n. | Franchise Agreement – | Items 7 and 8 |
| Insurance | Section 11 | |
| Obligation | Section in Agreement | Disclosure Document item |
| ------------------------------------------- | -------------------------------------------------------------------- | ----------------------------- |
| Area Development Agreement – N/A | ||
| o. | Franchise Agreement – | Items 6, 8, and 11 |
| Advertising | Section 7 Area Development Agreement – N/A | |
| p. Indemnification | Franchise Agreement – Section 14 Area Development Agreement – Section 8.B. | Item 6 |
| q. Owner's participation/managem | Franchise Agreement – Sections 5.C., 5.D. and 5.E. | Items 1, 11, and 15 |
| ent/staffing | Area Development Agreement – Section 1.B. | |
| r. | Franchise Agreement – | Item 6 |
| Records and reports | Section 10 Area Development Agreement – Section 4 | |
| s. | Franchise Agreement –Sections 1.B., 2.B., | Items 6, 8, and 11 |
| Inspections and audits | 6.F., and 10.C. Area Development Agreement – N/A | |
| t. | Franchise Agreement – | Items 6 and 17 |
| Transfer | Section 13 Area Development Agreement – Section 5 | |
| u. Renewal (or Extension of Rights) | Franchise Agreement – Section 3.B. of Franchise Agreement Area Development Agreement – N/A | Items 6 and 17 |
| v. | Franchise Agreement - | Items 6 and 17 |
| Post-termination | Section 16 | |
| obligations | Area Development Agreement – Section 7 | |
| w. | Franchise Agreement - | Item 17 |
| Noncompetition | Sections 9.C. and | |
| covenants | 16.H. Area Development Agreement -N/A | |
| x. Dispute resolution | Franchise Agreement - Section 17.E., 17.F., and 17.G. Area Development Agreement – Section 9 | Items 6 and 17 |
| y. | Franchise Agreement – | |
| Guarantee | Attachment B | |
| Obligation | Section in Agreement | Disclosure Document item |
| ------------ | ------------------------------ | ----------------------------- |
| Area Development Agreement – | Special Risk | |
| sheet, | ||
| Attachment B | Items 1 and 15 |
ITEM 10 FINANCING
We do not offer direct or indirect financing, and we do not guarantee your notes, leases, or other obligations.
ITEM 11 FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING
Except as listed below, we are not required to provide you with any assistance.
Pre-Opening Obligations under the Franchise Agreement
Before you open your Cicis Restaurant, we will:
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- Review and, at our discretion, accept the proposed site for your Cicis Restaurant. Our determination to accept or not accept a site may be based on various criteria (such as demographics, proposed rental rates, neighborhood and nearby business counts and characteristics, nearby residential populations, traffic count, accessibility, parking, visibility, signage, and competition) which may change in our discretion. We typically accept or reject the proposed site within 30 days of your providing us all required information. It is your responsibility to secure our approval of the proposed site for your Cicis Restaurant within 120 days following the execution of the Franchise Agreement, and if you fail to do so we may terminate the Franchise Agreement.
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Item 9 outlines a franchisee's obligations, referencing various sections of the Franchise Agreement and Disclosure Document items, including Item 6, which details different fees. Specifically, Item 9 indicates that compliance with the Franchise Agreement, as detailed in Section 6, is an obligation, and this compliance is directly linked to Items 8, 11, 14, and 16 of the Disclosure Document. Furthermore, the payment of fees, as described in Section 4 of the Franchise Agreement and various addenda, is also a franchisee obligation, connecting it to Items 5, 6, 7, 8, and 11.
Item 6 specifies the royalty fee structure, which is 5% of Net Sales for a Cicis Buffet Restaurant and 6% of Net Sales for a Cicis To Go Restaurant. This fee is typically due weekly. Item 6 also mentions a Non-Compliance Fee of $250 per failure to comply with the Franchise Agreement. More importantly, the royalty fee will increase by one percentage point until all deficiencies are corrected. This means that if a franchisee fails to meet certain obligations outlined in the Franchise Agreement, they not only incur a penalty fee but also face an increased royalty fee, affecting their profitability until compliance is restored.
In essence, the relationship between Item 6 and Item 9 is that the royalty fee structure and potential penalties for non-compliance (detailed in Item 6) are directly tied to the franchisee's obligations (outlined in Item 9). Failure to meet these obligations can result in financial penalties, including increased royalty fees, as specified in Item 6. Therefore, understanding and adhering to the obligations listed in Item 9 is crucial for a Cicis franchisee to avoid these additional costs and maintain a positive relationship with the franchisor.