Who determines whether obligations are 'material' for purposes of determining good standing for a Cicis franchisee?

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

This means that Cicis, at its discretion, decides which obligations are critical for a franchisee to be considered in good standing. Good standing can affect a franchisee's eligibility for certain benefits, such as reduced fees under incentive programs. For example, franchisees participating in the Veterans Incentive Program or the Underperforming Incentive Program may have their initial franchise fees or royalty fees waived or reduced, provided they remain in good standing.

The franchisee has no control over this determination, and Cicis's decision is final. This could create uncertainty for franchisees, as they may not always know which obligations Cicis considers most important. It is important for prospective franchisees to understand this provision and to seek clarity from Cicis regarding the specific obligations that are most likely to be deemed material.

This level of franchisor control is not uncommon in franchising, as franchisors need to ensure brand standards and consistency across all locations. However, the lack of franchisee input into the determination of "material" obligations highlights the importance of a strong working relationship and open communication between Cicis and its franchisees.