What is the consequence if the transferor of a Cicis franchise fails to sign a non-competition covenant?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
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- you (and your transferring owner(s)) (and your or their immediate family members) must sign a non-competition covenant in favor of us, commencing on the effective date of the Transfer and consistent with the post-term non-competition obligations contained in the most recent Franchise Agreement that you or your Affiliates have signed with us;
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to the 2025 Cicis Franchise Disclosure Document, a transfer of a Cicis franchise requires that the transferor (and their owners) sign a non-competition covenant. This covenant, in favor of Cicis, begins on the effective date of the transfer. The terms of the covenant must align with the post-term non-competition obligations outlined in the most recent Franchise Agreement signed between the transferor (or their affiliates) and Cicis.
The FDD excerpt does not explicitly state the consequences if the transferor fails to sign this non-competition covenant. However, it is standard franchise industry practice that failure to meet the conditions of transfer would prevent the transfer from being approved.
Therefore, a prospective Cicis franchisee should ask the franchisor about the specific ramifications of failing to sign the non-competition covenant. It is likely that Cicis would not approve the transfer if the transferor refuses to sign, thus preventing the sale of the franchise to the prospective franchisee.