Are sales taxes included in Cicis' definition of 'Net Sales'?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
"Net Sales" means all sales, revenues, charges and receipts received by you from your Cicis Restaurant or attributed to your Cicis Restaurant, including all revenue that is generated from the operation of any video game machines (including bulk machines) located at your Cicis Restaurant, whether from cash, check, credit or debit card, gift cards, barter exchange, trade credit or other credit transactions, but excludes (i) Sales Tax (as defined below), (ii) any refunds made for your customers, and (iii) receipts from the sale of products from vending machines located at your Cicis Restaurant.
Net Sales also includes all insurance proceeds you receive to replace revenue that you lose from the interruption of your Cicis Restaurant due to a casualty or other event covered by business interruption or similar insurance coverage. "Sales Tax" means all taxes collected directly from customers, based upon present or future Law, collected by you in the operation of your Cicis Restaurant, and any other tax, excise, or duty which is levied or assessed against you by any federal, state, municipal, or local authority, based on sales of specific merchandise sold at or from your Cicis Restaurant, provided that such taxes are actually transmitted to the appropriate taxing authority.
We may authorize certain other items to be excluded from Net Sales.
We may, in our discretion, revoke or withdraw any such permission at any time.
Source: Item 6 — OTHER FEES (FDD pages 14–21)
What This Means (2025 FDD)
According to Cicis' 2025 Franchise Disclosure Document, 'Net Sales' is defined as all revenue received by a franchisee's Cicis restaurant. However, this definition specifically excludes sales taxes collected directly from customers. This means that when calculating royalties and other fees based on Net Sales, Cicis franchisees do not include the amount of sales tax they collect. This exclusion applies as long as the sales taxes are actually transmitted to the appropriate taxing authority.
This is a common practice in franchising, as franchisees typically act as collection agents for sales taxes on behalf of the government. By excluding sales tax from Net Sales, Cicis ensures that franchisees are not paying royalties on money that is simply being passed through to the government. The definition of Net Sales for Cicis also excludes any refunds made to customers and receipts from vending machines located at the Cicis restaurant.
Furthermore, the FDD specifies that Net Sales includes all insurance proceeds received to replace revenue lost due to business interruption covered by insurance. Cicis may also authorize other items to be excluded from Net Sales at their discretion, and they retain the right to revoke such permissions at any time. This provides Cicis with some flexibility in how they calculate Net Sales, but it also introduces a degree of uncertainty for franchisees, as these exclusions could potentially change.