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How much does Cicis cost?
Initial Investment Range
$242,086 to $1,038,753
Franchise Fee
$30,000 to $45,000
The franchise is for the development and operation of a Cicis® restaurant that offers value-priced pizza, pastas, salads, desserts, and other food items.
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Cicis April 25, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: August 22, 2025
DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The franchisor, On Smile LLC (On Smile), is part of a complex system whose key affiliates, including the predecessor franchisor, filed for Chapter 11 bankruptcy in 2021. While recent financials in Item 21 show profitability, this history indicates significant past instability. The franchisor's financial health is intertwined with numerous related-party transactions and relies on a performance guaranty from an affiliate, suggesting potential weakness on its own. This history poses a risk to long-term stability and support.
Potential Mitigations
- A franchise accountant should scrutinize the audited financial statements in Exhibit G, including all footnotes and the auditor's report, to assess the current financial health and dependency on affiliates.
- Discuss the implications of the prior bankruptcy and the current complex corporate structure with your franchise attorney.
- It is advisable to ask the franchisor about its current capitalization and ability to support the system independently of affiliate guarantees.
High Franchisee Turnover
Medium Risk
Explanation
Item 20 data from 2022 to 2024 reveals a consistent pattern of franchisee exits. Over the three-year period, a total of 36 franchised buffet restaurants have ceased operations, been terminated, not renewed, or were reacquired by the franchisor. While the annual rate is not extreme, the consistent number of exits, especially under the 'ceased operations' and 'reacquired' categories, could suggest underlying issues with franchisee profitability or satisfaction within the system.
Potential Mitigations
- It is critical to contact a significant number of former franchisees listed in Exhibit F to understand their reasons for leaving the system.
- A business advisor can help you analyze the three-year trend of exits as a percentage of the total system size to gauge the churn rate.
- Your accountant should review the Item 20 data in conjunction with the Item 19 financial performance representation to assess potential profitability challenges.
Rapid System Growth
Low Risk
Explanation
This risk was not identified in the FDD package. The data in Item 20 shows the franchise system has been shrinking, not growing rapidly, over the past three years. While this avoids the risks of outpacing support infrastructure, it introduces the opposite risk of a contracting brand footprint, which may impact brand recognition and market presence. A shrinking system can be a sign of systemic challenges or a lack of franchisee success.
Potential Mitigations
- A business advisor should help you investigate the reasons for system shrinkage by analyzing market trends and speaking with current franchisees.
- Discuss the franchisor’s strategy for stabilizing and growing the system with them directly.
- Consulting your attorney about territorial protections becomes even more important in a shrinking system to preserve your market area.
New/Unproven Franchise System
Medium Risk
Explanation
The current franchisor entity, On Smile, was formed in February 2021 and began franchising in May 2021, following the bankruptcy of its predecessor and affiliate, CiCi Enterprises, LP. While the Cicis brand itself is well-established and management is experienced, you would be contracting with a relatively new corporate entity operating a legacy brand post-reorganization. This presents a risk related to the new ownership's and entity's specific track record and strategic direction.
Potential Mitigations
- Your attorney should analyze the transfer of rights from the predecessor to the new franchisor entity.
- A business advisor can help you research the track record and reputation of the new ultimate ownership, the Sunil D. Dharod Revocable Trust.
- Speaking with franchisees who have operated under both the old and new ownership structures can provide valuable insight.
Possible Fad Business
Low Risk
Explanation
This risk was not identified. The Cicis Pizza concept is based on the value-priced pizza buffet model, which is a long-standing, though competitive, segment of the restaurant industry. It is not dependent on a short-term trend or novelty, which reduces the risk of the business model becoming obsolete due to shifting consumer tastes.
Potential Mitigations
- Even for established concepts, a business advisor can help you analyze long-term consumer trends in the specific restaurant segment.
- Understanding the competitive landscape for value-priced dining in your specific market is crucial; a local real estate professional can assist.
- Discuss the franchisor's plans for brand innovation and adaptation with them to gauge their strategy for staying relevant.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD. Item 2 discloses that the key executives of On Smile have extensive prior experience in the restaurant industry, and most have served in senior roles with the Cicis brand or its affiliates for many years. This level of industry and brand-specific experience suggests the management team is familiar with the operational and franchising aspects of the business, which is a positive factor.
Potential Mitigations
- Even with an experienced team, it is valuable to speak with current franchisees about their direct experiences with management's support and strategic direction.
- A business advisor can help you research the public reputation and past performance of the key executives mentioned in Item 2.
- Seeking clarification from the franchisor about the roles and responsibilities of the executive team can provide additional confidence.
Private Equity Ownership
Low Risk
Explanation
This risk was not identified. FDD Item 1 indicates that the ultimate ownership of the franchisor traces back to the Sunil D. Dharod Revocable Trust. This does not appear to be a traditional private equity firm, which typically has a defined investment horizon and may prioritize short-term returns over the long-term health of the franchise system. Ownership by an individual or family trust may suggest a longer-term perspective.
Potential Mitigations
- A business advisor can help research the business history and reputation of the ultimate owner, Sunil Dharod, and his other ventures.
- Your attorney should review the assignment clauses in the Franchise Agreement to understand the implications if the system were sold in the future.
- Discussing the long-term vision for the brand with the franchisor can provide insight into their strategic priorities.
Non-Disclosure of Parent Company
Low Risk
Explanation
This risk was not identified. The FDD provides a complex but clear ownership structure in Item 1, identifying parent companies up to the controlling trust. Furthermore, while the franchisor entity itself is relatively new, the FDD includes a Guaranty of Performance in Exhibit G from an affiliate, CiCi Services LLC. This provides some financial backing for the franchisor's obligations, mitigating the risk of contracting with a thinly capitalized entity.
Potential Mitigations
- An accountant should review the terms of the Guaranty of Performance to understand the extent of the protection it offers.
- Your attorney should analyze the relationship between the franchisor and the guarantor to assess any potential conflicts or limitations.
- Inquiring with the franchisor about the financial health and capitalization of the guarantor entity is a prudent step.
Predecessor History Issues
High Risk
Explanation
The FDD discloses significant negative history regarding its predecessors and affiliates. Item 1 identifies CiCi Enterprises, LP as the predecessor franchisor, and Item 4 states this entity, along with several other affiliates, filed for Chapter 11 bankruptcy in 2021. This history of financial failure within the same brand structure, although preceding the current franchisor entity, is a major red flag concerning the historical health and viability of the Cicis system.
Potential Mitigations
- Your attorney must carefully explain the implications of the predecessor's bankruptcy on the franchise system's assets and obligations.
- A franchise accountant should review how the bankruptcy and reorganization may have affected the system's financial structure and health.
- It is critical to ask the franchisor what specific changes were made post-bankruptcy to prevent similar issues from recurring.
Pattern of Litigation
High Risk
Explanation
A significant pattern of litigation exists, but it is of a unique and concerning nature. Item 3 discloses ongoing, consolidated lawsuits between the principal owners of the brand, Anand Gala and Sunil Dharod. The allegations include breach of contract, breach of fiduciary duty, and fraud, stemming from their co-ownership and acquisition of the Cicis brand. This internal war at the highest level of leadership represents a severe risk to system stability, management focus, and strategic direction.
Potential Mitigations
- This high-level ownership dispute must be discussed in detail with your franchise attorney to understand the potential impact on your franchise.
- A business advisor can help you assess the risk that this internal conflict poses to the brand's health and future.
- Asking the franchisor how they are insulating the franchise operations from this ownership-level litigation is a critical question.
Disclosure & Representation Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Financial & Fee Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Legal & Contract Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Territory & Competition Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Regulatory & Compliance Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Franchisor Support Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Operational Control Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Term & Exit Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Miscellaneous Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems