Following notification of death or permanent disability, how long does Cicis have to exercise its option to purchase the franchisee's interest?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
will, and hereby do, indemnify and hold us harmless against any and all judgments, fines, losses, liabilities, costs, amounts paid in settlement, and reasonable expenses (including, but not limited to attorneys' fees) incurred in connection with our interim management of your Restaurant, except by reason of our gross negligence or willful misconduct. Any Transfer upon death or permanent disability will be subject to the same terms and conditions as described in this Section 13 for any inter vivos Transfer.
- (3) Anything contained in this Section 13.D to the contrary notwithstanding, upon your or your Managing Owner's death or permanent disability, we (or our designee) will have the option, to be exercised in writing within 20 days from the date we receive notice of the death or permanent disability pursuant to Section 13.D.(2) ("Option Period"), to elect to purchase your interest and/or the Managing Owner's interest in this Agreement, your Restaurant, or you, as applicable, as well as the further option to elect to purchase the interest of any other of your Owners (individually, "Interest" and collectively, "Interests") at the price and upon the terms set forth below.
- (a) During the Option Period, the purchase price for the Interests will be determined with reference to the agreed value of your Restaurant ("Agreed Value"), as set forth below. If you are a natural person, then the Agreed Value will be an amount equal to 100% of the Agreed Value. If you are a legal entity, then the purchase price for any Interest will be an amount which bears the same relationship to the Agreed Value as the interest of the Person whose interests are being purchased bears to the total ownership interests in you.
- (b) The Agreed Value will be an amount equal to the Initial Value (defined below), less the total current and long-term liabilities we or our designee assume. The Initial Value will be equal to the following (the "Initial Value"):
- (i) If the triggering death or permanent disability occurs prior to six (6) months following the Opening Date of your Restaurant, then the Initial Value will be an amount equal to your Original Cost (defined below), plus 10%.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, in the event of the death or permanent disability of a franchisee or their Managing Owner, Cicis has an option to purchase the franchisee's interest in the franchise. Cicis must exercise this option in writing within 20 days from the date they receive notice of the death or permanent disability. This 20-day period is referred to as the "Option Period."
During this Option Period, the purchase price for the interests will be determined based on the agreed value of the restaurant. If the franchisee is a natural person, the agreed value will be 100% of the agreed value. If the franchisee is a legal entity, the purchase price will be proportional to the ownership interest being purchased relative to the total ownership interests in the entity.
The agreed value is calculated as the Initial Value less any current and long-term liabilities that Cicis assumes. The Initial Value depends on when the death or permanent disability occurs relative to the restaurant's opening date. If it occurs within six months of the opening date, the Initial Value is the Original Cost plus 10%. If it occurs after six months but before 12 months, the Initial Value is based on annualized net sales for the five months preceding the event, divided by two. If it occurs after 12 months, the Initial Value is based on the total net sales for the 12 months preceding the event, divided by two.
If Cicis exercises its option to purchase the franchisee's interest, the closing of the purchase will occur within 30 days of Cicis receiving notice of the death or permanent disability. However, if additional time is needed to document the Start-Up Expenditures, the closing can be extended to within 45 days after the notification date. This clause ensures that Cicis has a defined period to decide on purchasing the franchise and provides a timeline for completing the transaction, offering some clarity to the franchisee's estate or representative during a difficult time.