What is the definition of 'owner' in the context of the Cicis franchise agreement?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
by, under common control with, or owning or controlling you or us. "Control" means the power to direct or cause the direction of management and policies. "Including" means "including, without limitation."
If two or more persons are at any time the owners of the Development Rights, whether as partners or joint venturers, their obligations and liabilities to us will be joint and several. References to "owner" mean any person holding a direct or indirect ownership interest (whether of record, beneficially, or otherwise) or voting rights in you (or a transferee of this Agreement and your Development Rights or an ownership interest in you), including, without limitation, any person who has a direct or indirect interest in you (or a transferee), this Agreement, the Franchise, or your Development Rights and any person who has any other legal or equitable interest, or the power to vest in himself or herself any legal or equitable interest, in their revenue, profits, rights, or assets. References to an "ownership interest" in you or one of your owners (if a Business Entity) mean the percent of the voting shares or other voting rights that results from dividing 100% of the ownership interests by the number of owners. "Person" means any natural person, corporation, limited liability company, general or limited partnership, unincorporated association, cooperative, or other legal or functional entity.
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, an 'owner' is defined broadly as any individual or entity holding a direct or indirect ownership interest or voting rights in the franchisee. This includes those with record ownership, beneficial ownership, or other forms of interest. The definition extends to anyone with a direct or indirect interest in the franchise agreement, the franchise itself, or the development rights. It also encompasses individuals or entities with any legal or equitable interest, or the power to acquire such interest, in the revenue, profits, rights, or assets of the franchisee.
This definition is significant because it impacts various aspects of the franchise agreement. For instance, the franchisor, Cicis, grants development rights based on their perception of the character, skill, and financial capacity of the franchisee and their owners. The obligations and liabilities of multiple owners are considered joint and several, meaning each owner is fully responsible for the entire obligation. Furthermore, the transfer of ownership interests, even indirect ones, requires the franchisor's prior written consent, and failure to obtain this consent constitutes a material breach of the agreement.
The broad definition of 'owner' ensures that Cicis maintains control over who is involved in the franchise and that all parties with a significant stake in the business are held accountable. This is a common practice in franchising, as franchisors want to ensure that all individuals with influence over the franchise operation meet their standards and are committed to upholding the brand's reputation and operational guidelines. The definition also allows Cicis to assess the financial stability and business acumen of all individuals with a vested interest in the franchise.
Prospective franchisees should carefully consider this definition and ensure that all individuals or entities with any form of ownership interest or control are fully aware of their obligations under the franchise agreement. This includes not only direct shareholders but also those with indirect interests or the potential to acquire such interests. Failing to disclose or obtain consent for any transfer of ownership could have serious consequences, including breach of contract and potential termination of the franchise agreement.