What are the consequences if a Cicis franchisee files for bankruptcy?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
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- you (or any of your owners) file a petition in bankruptcy or a petition in bankruptcy is filed against you; you make an assignment for the benefit of creditors or admit in writing your insolvency or inability to pay your debts generally as they become due; you consent to the appointment of a receiver, trustee, or liquidator of all or the substantial part of your property; any of your or your Affiliates' Restaurants are attached, seized, subjected to a writ or distress warrant, or levied upon, unless the attachment, seizure, writ, warrant, or levy is vacated within 30 days; or any order appointing a receiver, trustee, or liquidator of your or your Affiliates' Restaurants are not vacated within 30 days following the order's entry;
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, if a franchisee files for bankruptcy, it constitutes an event of default under the franchise agreement. Specifically, Item 23 outlines that if the franchisee, or any of their owners, files a petition in bankruptcy, or if a bankruptcy petition is filed against them, this triggers consequences under the agreement.
In addition to filing for bankruptcy, other related financial distress events also trigger consequences. These include making an assignment for the benefit of creditors, admitting insolvency or inability to pay debts in writing, or consenting to the appointment of a receiver, trustee, or liquidator for their property. Furthermore, if any of the franchisee's restaurants are attached, seized, or levied upon, and such actions are not vacated within 30 days, it also constitutes a default. Similarly, any order appointing a receiver, trustee, or liquidator that is not vacated within 30 days of its entry also triggers consequences.
These stipulations are fairly standard in franchise agreements, as the financial stability of a franchisee directly impacts the brand's reputation and the ability to maintain consistent operations. Bankruptcy or related financial issues can lead to termination of the franchise agreement, allowing Cicis to reassign the territory to a more financially stable operator. Prospective franchisees should carefully consider the financial risks and obligations involved before entering into a franchise agreement with Cicis.