How are vendor rebates classified in Cicis' combined statements of income?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
s production costs are incurred and paid in the current year for the next year's advertising campaign. In those instances, production costs are recorded as prepaid expenses and then expensed in the subsequent fiscal year.
Consideration from vendors: The Company has entered into beverage supply agreements with certain major vendors. Pursuant to the terms of these arrangements, consideration is provided to the Company for the benefit of the Marketing Fund from the vendors, based upon the dollar volume of purchases for company-operated restaurants and franchised restaurants. In accordance with U.S. GAAP governing consideration received from vendors, these amounts are recognized as earned throughout the year and are classified in the combined statements of income within revenue with an offset included
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–64)
What This Means (2025 FDD)
According to Cicis' 2025 Franchise Disclosure Document, consideration received from vendors through beverage supply agreements is classified within revenue on the combined statements of income. These agreements provide consideration to Cicis for the benefit of the Marketing Fund, based on the dollar volume of purchases made by both company-operated and franchised restaurants. The amounts are recognized as earned throughout the year. An offsetting amount is included in marketing general and administrative costs, representing contributions to the marketing fund.
In 2024, Cicis received rebates amounting to $7,907,088, and in 2023, the company received $8,874,070. These rebates are tied to the volume of purchases from company-operated and franchised restaurants, meaning that a franchisee's purchasing decisions directly influence the amount of rebates Cicis receives.
This accounting treatment means that while the rebates increase Cicis' reported revenue, there is a corresponding increase in marketing expenses. This arrangement ensures that the funds are earmarked for marketing activities, which should benefit both Cicis and its franchisees by enhancing brand awareness and driving sales. Prospective franchisees should understand how these rebates are generated and used, as they directly impact the marketing resources available to support their business.