Who determines whether obligations are 'material' for determining good standing in the Cicis Veteran's Incentive Program?

According to Cicis's 2025 Franchise Disclosure Document, Cicis has sole discretion in determining whether particular obligations are considered "material" when assessing a franchisee's good standing within the Veteran's Incentive Program. This determination is final.

This means that Cicis decides which obligations under the Franchise Agreement, Area Development Agreement, and any other agreements are significant enough to impact a franchisee's eligibility and standing in the Veteran's Incentive Program. The Veteran's Incentive Program includes benefits such as waivers of the initial franchise fee or development fee and modifications to royalty fees.

For a prospective franchisee, this implies that Cicis has the power to define what constitutes a material breach or non-compliance. Therefore, even if a franchisee believes they are meeting the essential requirements, Cicis could deem a specific unmet obligation as material, leading to the revocation of benefits under the Veteran's Incentive Program. It is important for franchisees to understand all obligations under their agreements with Cicis and to maintain open communication with the franchisor to ensure compliance and good standing.

This level of franchisor discretion is not uncommon in franchising, as franchisors need to ensure brand standards and operational consistency. However, it places a significant responsibility on Cicis to exercise this discretion fairly and transparently. A prospective franchisee should seek clarity on what Cicis considers "material" obligations to minimize potential disputes and ensure they can maintain their good standing in the Veteran's Incentive Program.