What is the dependency between the Franchise Agreement and the Underperforming Incentive Program Addendum for Cicis?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
On Smile LLC ("we") and the "Franchisee" identified below ("you" and, together with us, the "Parties") execute this Underperforming Incentive Program Addendum (the "Addendum") to supplement and amend that certain Franchise Agreement the Parties have executed immediately prior to the execution of this Addendum (as it might have otherwise been amended, the "Franchise Agreement"). The "Effective Date" of this Addendum is the same as the Effective Date of the Franchise Agreement. Terms used but not defined in this Addendum have the meanings given them in the Franchise Agreement. For valuable consideration, receipt and sufficiency of which are acknowledged, the Parties agree as follows:
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, the Underperforming Incentive Program Addendum is designed to supplement and amend the existing Franchise Agreement. The addendum is executed alongside the Franchise Agreement, indicating that it modifies the original agreement rather than existing independently. The effective date of the Addendum is the same as the Franchise Agreement, further emphasizing their simultaneous nature. Terms that are used in the addendum but not specifically defined take on the same meanings as those defined in the Franchise Agreement.
To participate in the Underperforming Incentive Program, the franchisee must meet certain qualifications and be approved by Cicis. The franchisee also confirms that the information provided in their application for the program is accurate. The franchisee must be in 'Good Standing,' as defined in the addendum. If the franchisee meets these conditions, Cicis may offer certain incentives, such as modifying royalty fees.
Specifically, the royalty fees may be adjusted to 2% of Net Sales from the effective date to the first anniversary, 3% from the first to the second anniversary, and then revert to the rate specified in the original Franchise Agreement. However, these modifications are contingent upon the franchisee and their affiliates remaining in 'Good Standing.' This dependency means that any failure to maintain 'Good Standing' could result in the loss of these reduced royalty fees, reverting to the original terms of the Franchise Agreement. Therefore, the Underperforming Incentive Program Addendum is directly linked to the Franchise Agreement, modifying specific terms based on the franchisee's continued compliance and participation in the program.