What is the single performance obligation under the Cicis franchise agreement?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchise agreements: The franchise agreements include: (a) the right to use the symbolic intellectual property over the term of each franchise agreement, (b) pre-opening services, such as training, and (c) ongoing services, such as management of the advertising fund contributions, development of training materials and menu items and restaurant monitoring. These promises are highly dependent upon and interrelated with the franchise right granted in the franchise agreement, so they are not considered to be individually distinct and, therefore, are accounted for as a single performance obligation. The performance obligation under the franchise agreement is the promise to provide daily access to the symbolic intellectual property over the term of each franchise agreement, which is a series of distinct services that represents a single performance obligation. Although the franchisor's underlying activities associated with the symbolic intellectual property will vary, both within a day and day-to-day, the symbolic intellectual property is accessed over time and the customer (the franchisee) simultaneously receives and consumes the benefit from the franchisor's performance of providing access to the symbolic intellectual property (including other related activities).
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–64)
What This Means (2025 FDD)
According to the 2025 Cicis Franchise Disclosure Document, the franchise agreement is viewed as having a single performance obligation. This means that while Cicis provides multiple services to its franchisees, these services are bundled together and treated as one overarching commitment.
Specifically, the single performance obligation is Cicis' promise to provide daily access to its symbolic intellectual property throughout the term of the franchise agreement. This includes the right for the franchisee to use Cicis' trademarks, logos, and brand identity. This access is considered a series of distinct services that, when combined, represent the single performance obligation.
While the specific activities Cicis undertakes to maintain this intellectual property access may vary from day to day, the franchisee continuously benefits from having access to it. The franchisee simultaneously receives and consumes the benefits of Cicis providing access to its symbolic intellectual property, along with other related activities that support the brand and franchise system.