Under what condition will the Cicis royalty fee increase due to a Non-Compliance Fee?
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. |
Source: Item 6 — OTHER FEES (FDD pages 14–21)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, a franchisee's royalty fee can increase as a penalty for non-compliance. Specifically, if a Cicis franchisee defaults on their obligations under the Franchise Agreement, they will incur a Non-Compliance Fee of $250 for each failure to comply. In addition to this fee, the royalty fee will increase by one percentage point. This increase remains in effect until the franchisee corrects all identified deficiencies.
This provision serves as a strong incentive for Cicis franchisees to adhere strictly to the terms outlined in the Franchise Agreement. Failure to do so not only results in an immediate financial penalty but also leads to an ongoing increase in royalty payments, impacting profitability until the issues are resolved. The royalty fee is normally 5% of Net Sales for a Cicis Buffet Restaurant or 6% of Net Sales for a Cicis To Go Restaurant, so a one percent increase could be significant.
Prospective franchisees should carefully review the Franchise Agreement to fully understand their obligations and the potential consequences of non-compliance. Understanding the specific requirements and maintaining open communication with Cicis can help franchisees avoid these penalties and maintain a positive working relationship with the franchisor. It is also important to note that the Non-Compliance Fee is payable only if the franchisee is in default of their obligations under the Franchise Agreement.