How do the standards and specifications outlined in Cicis's Item 8 impact the ongoing royalty fees that franchisees must pay as described in Item 6?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
| 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, adherence to the brand's standards and specifications directly impacts a franchisee's royalty fee obligations. Cicis mandates strict compliance with its System Standards, which cover all aspects of restaurant operations, from food products to equipment. Failure to comply with these standards can trigger a 'Non-Compliance Fee' of $250 per instance. More significantly, the royalty fee increases by one percentage point until all deficiencies are corrected.
This means that if a Cicis franchisee fails to meet the brand's standards—for example, by using unapproved food suppliers or not maintaining the required technology—they not only incur an immediate penalty but also face a higher royalty rate until the issue is resolved. For a Cicis Buffet Restaurant, the standard royalty is 5% of Net Sales, while for a Cicis To Go Restaurant, it is 6%. Non-compliance would increase these rates to 6% and 7%, respectively, creating a substantial financial burden if the issues persist.
This structure incentivizes franchisees to maintain Cicis's standards consistently. The increased royalty fee acts as a strong deterrent against cutting corners or deviating from approved practices. Franchisees must invest in approved suppliers and adhere to operational guidelines to avoid the double penalty of the non-compliance fee and the elevated royalty rate. This system ensures brand consistency and quality across all Cicis locations, protecting the brand's reputation and customer experience.