What constitutes a default under the Cicis Franchise Agreement that would violate 'Good Standing'?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Definitions. As used in this Amendment, "Good Standing" means that you, your owners, and your affiliates (if any) are not in default of the Franchise Agreement or any other agreement with us or our affiliates; and that you, your owners, and your affiliates have substantially and timely complied with all of the terms and conditions of all such agreements, including the timely satisfaction of all monetary obligations owed to us or our affiliates.
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- you (or any of your owners) (a) fail to comply with three (3) or more of your or their obligations under this Agreement during any 12 consecutive month period or (b) on two (2) or more separate occasions within any six (6) consecutive month period fail to comply with the same obligation under this Agreement, in either case, whether or not we notify you of the failures, and, if we do notify you of the failures, whether or not you correct the failures after our delivery of notice to you;
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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;
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- you (or any of your owners) fail to comply with anti-terrorism laws, ordinances, regulations and Executive Orders;
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- you (or any of your owners) fail to comply with any other provision of this Agreement and do not correct the failure within 30 days after we deliver written notice of the failure to you;
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- you or a Guarantor or an Affiliate fails to comply with any other agreement with us or our Affiliate, including any Franchise Agreement, unless the failure is timely and completely cured within any cure period provided under the applicable agreement); or
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- you (or any of your owners) engage in any conduct which, in our opinion, adversely affects the reputation of Cicis Restaurants or the goodwill associated with the Marks.
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, several actions can cause a franchisee and their affiliates to lose "Good Standing," which is defined as not being in default of the Franchise Agreement or any other agreement with Cicis or its affiliates. This includes substantially and timely complying with all terms and conditions of such agreements, including the timely satisfaction of all monetary obligations owed to Cicis or its affiliates.
Specific instances that could trigger a default include failing to comply with three or more obligations under the agreement within a 12-month period, or failing to comply with the same obligation on two or more separate occasions within a six-month period. Filing for bankruptcy, making an assignment for the benefit of creditors, admitting insolvency, or consenting to the appointment of a receiver are also grounds for default. Additionally, if any of the franchisee's restaurants are subjected to attachment, seizure, or levy, and such actions are not vacated within 30 days, it constitutes a default.
Further, failing to comply with anti-terrorism laws, any other provision of the Franchise Agreement (if not corrected within 30 days of written notice), or any other agreement with Cicis or its affiliates can result in a default. Engaging in conduct that adversely affects the reputation of Cicis Restaurants or the goodwill associated with the Marks is also a cause for default. Cicis retains sole discretion to determine whether particular obligations are "material" for determining good standing, and their decision is final.
Maintaining "Good Standing" is crucial for Cicis franchisees, as it impacts various benefits such as reductions in the initial franchise fee or development fee. Losing "Good Standing" can lead to the revocation of these benefits, requiring the franchisee to pay the full fees. Additionally, "Good Standing" can affect the franchisee's ability to terminate the Franchise Agreement early without cause and without incurring lost revenue damages, highlighting the importance of adhering to all contractual obligations and maintaining a positive operational reputation.