Under what conditions is a Cicis franchisee required to pay the Audit Fee?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
roval procedures. |
| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Indemnification | Amount of damages suffered | On demand | You must indemnify, defend, and hold us, our affiliates, and our and affiliates' respective owners, directors, managers, officers, employees, agents, successors, and assignees harmless against all third party claims arising from the development or operation of your Restaurant (or by your employees, or others that arise from your employment practices). |
| Audit Fee | Cost of audit | When billed | Payable only if we find, after an audit, that you have understated any amount owed to us by more than 3% or if we decide to conduct an audit because of your failure to timely submit the required records or reports. |
| Insurance Fee | $250, plus actual cost of obtaining the insurance coverage | When billed | If you fail to maintain the required insurance, we have the right, but not the obligation, to obtain it for you. If we do, we will charge you a fee plus the cost of the insurance. |
| Insufficient Funds Fee | $100 per occurrence | On demand | If a payment does not clear your bank, we charge a service fee of $25, which includes the bank charge. We may draft your account for this fee. |
| Enforcement Costs | Costs awarded by the applicable court | As incurred | Payable only if you do not comply with the Franchise Agreement or Area Development Agreement, and we are the prevailing party in any relevant litigation. |
| Post-Termination / Post-Expiration De-identification Costs | Actual cost incurred by us | As incurred | If you fail to de-identify after the franchise terminates or expires, we may make the necessary changes at your expense. |
| Management Fee | 10% of Net Sales, plus costs and expenses | As incurred | If we assume management of your Restaurant upon your or your Manager Owner's death, we may charge you the Management Fee, plus the direct out-of-pocket costs and expenses incurred in the operation of the Restaurant. |
| Type of Fee(1) | Amount | Due Date | Remarks |
| ----------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Lost Revenue Damages | A lump sum amount equal to the net present value of the royalty fees, the marketing fund contributions, and contributions to the local marketing cooperative that would have become due from the last date of regular operations of your Restaurant in compliance with the Franchise Agreement to the earlier of: (a) 104 weeks following the date of termination, or (b) the originally scheduled expiration of the Franchise Agreement term. | On demand | Payable if we terminate the Franchise Agreement because of your breach or if you terminate the Franchise Agreement without cause. |
| Data Collection Fee | $50 per week, bu |
Source: Item 6 — OTHER FEES (FDD pages 14–21)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, a franchisee is required to pay the Audit Fee under specific circumstances related to financial accuracy and reporting. The Audit Fee, which covers the cost of the audit, becomes payable if Cicis finds, after conducting an audit, that the franchisee has understated any amount owed to Cicis by more than 3%.
Additionally, Cicis may levy the Audit Fee if they decide to conduct an audit because the franchisee failed to submit the required records or reports in a timely manner. This condition underscores the importance of accurate and punctual financial reporting to Cicis. The fee itself covers the cost incurred by Cicis for performing the audit.
In practical terms, this means that Cicis franchisees must maintain meticulous and transparent financial records. They must ensure that all payments due to Cicis are accurately calculated and reported. Failure to do so, either through underreporting by more than 3% or through late or missing reports, can trigger an audit and the associated Audit Fee. This policy incentivizes franchisees to maintain accurate financial practices and adhere to reporting deadlines, ensuring financial transparency and compliance within the Cicis franchise system.