Are there modifications to the Royalty Fees for franchisees reopening a Cicis restaurant?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
gree that the Initial Franchise Fee due under the Franchise Agreement shall be reduced to $5,000. We reserve the right to revoke the foregoing reduction at any time you cease to be in good standing, in which case, you will pay us the balance of the full Initial Franchise Fee which, absent the foregoing reduction, is required under the Franchise Agreement. "Good Standing" means that you and your affiliates, as applicable, are in compliance with all material obligations under the Franchise Agreement and all other agreements between us and you or them. You agree that we will have sole discretion to determine whether particular obligations are "material" for purposes of determining good standing, and our decision will be final.
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- Modification of Royalty Fees. Notwithstanding anything in the Franchise Agreement to the contrary, you and we agree as follows:
Provided you and your affiliates are in good standing, for Net Sales generated through the 1st anniversary of the Effective Date of this Agreement, the Royalty Fee will be calculated at 3% of those Net Sales; and for Net Sales generated from the day following the 1st anniversary of the Effective Date of this Agreement through the 2nd anniversary of the Effective Date of this Agreement, the Royalty Fee will be calculated at 4% of those Net Sales. If, at any time prior to the 2nd anniversary of the Effective Date of this Agreement, you cease to be in good standing, the foregoing Royalty Fee reductions will automatically, and without any further notice, be null and void, and the Royalty Fee will thereafter be calculated as described in the Franchise Agreement without regard to this paragraph.
- Right to Close Restaurant. You and we agree that you will have a one-time right to permanently close the Restaurant if, for the period beginning on the date the Restaurant reopens for regular business and ending on the day that is 1.5 years after that date (the "Assessment Period"), the Restaurant's EBITDA (earnings before interest, taxes, depreciation and amortization), considering only those expenses that are normal restaurant-level operating expenses, is a negative number.
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, there are modifications to royalty fees for franchisees reopening a Cicis restaurant. If the franchisee and their affiliates are in good standing, the royalty fee will be calculated at 3% of net sales for the first year from the agreement's effective date. For the subsequent year, the royalty fee will be 4% of net sales.
However, these reduced royalty fees are contingent on the franchisee remaining in good standing. If the franchisee ceases to be in good standing at any point before the second anniversary of the agreement's effective date, the royalty fee reductions become void, and the standard royalty fee as described in the Franchise Agreement will apply.
Additionally, Cicis offers an Underperforming Incentive Program that includes royalty fee modifications. Franchisees participating in this program and remaining in good standing will have a royalty fee of 2% of net sales from the effective date through the day preceding the first anniversary, 3% of net sales from the first to the second anniversary, and thereafter, the rate specified in Section 4.C of the Franchise Agreement. Another excerpt states that for franchisees participating in the Program and in good standing, the Royalty Fee will be calculated at 3% of net sales for the first year and 4% for the second year from the restaurant's opening date. If the franchisee is no longer approved to participate in the Program or is not in good standing before the second anniversary of the opening date, the reduced royalty fees are void, and the standard royalty fee applies as described in Section 4.C.
These modifications provide a financial incentive for franchisees reopening a Cicis restaurant, but they are subject to specific conditions, including maintaining good standing and, in some cases, participating in the Underperforming Incentive Program. Prospective franchisees should carefully review the terms of the Franchise Agreement and any addenda related to these programs to understand the specific requirements and potential benefits.