What is the condition regarding 'Good Standing' that must be maintained by the Cicis franchisee and their affiliates to receive the modified royalty fees?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Reimbursement of Renewal Fee. If, in connection with your purchase and, if applicable, re-opening of the Restaurant, you conducted a grand opening promotion approved by us, we will reimburse you the expenses you incurred and paid in executing the grand opening promotion (less salaries and benefits paid to your owners or employees), up to the amount of the Renewal Fee you paid, if any, when you signed the Franchise Agreement. If you seek reimbursement under this paragraph, you must submit documentary proof of the paid expense within 30 days following the completion of your grand opening promotion. We reserve the right to determine, in our sole discretion, whether any submitted expense qualifies for reimbursement under this paragraph.
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- Modification of Royalty Fees. Section 4.C of the Franchise Agreement is supplemented and amended by adding the following to the end of the Section:
We agree that, provided you and your affiliates remain in Good Standing (as defined in the Underperforming Incentive Program Addendum), the Royalty Fee will be as follows: (i) 2% of Net Sales derived from the Effective Date through the day preceding the first anniversary of the Effective Date; (ii) 3% of Net Sales derived from the 1st anniversary to the 2nd anniversary of the Effective Date; and (iii) thereafter, the rate specified in Section 4.C of this Agreement.
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- Termination; Lost Revenue Damages.
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, to receive modified royalty fees, a franchisee and their affiliates must remain in "Good Standing." For franchisees participating in the Underperforming Incentive Program, Cicis specifies that the royalty fee will be reduced to 2% of Net Sales from the Effective Date through the day preceding the first anniversary of the Effective Date, and 3% of Net Sales from the 1st anniversary to the 2nd anniversary of the Effective Date, provided the franchisee and their affiliates remain in Good Standing.
The FDD also states that for franchisees who have asked to participate in the Veteran's Incentive Program, Cicis will waive the Initial Franchise Fee while the franchisee is approved to participate in the Program and remains in good standing.
Cicis defines "Good Standing" as compliance with all material obligations under the Franchise Agreement and all other agreements between Cicis and the franchisee or their affiliates. Cicis retains sole discretion to determine whether particular obligations are "material" for determining good standing, and their decision is final. If a franchisee ceases to be in good standing, the royalty fee reductions or waivers of the initial franchise fee will be revoked automatically.