Must a Cicis franchisee execute a non-compete agreement when transferring their Area Development Agreement?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in | Summary | |
|---|---|---|---|
| Area Development Agreement – Section 5.C. | Franchise or other Agreement | You must (i) pay all amounts due us and our affiliates and third- party vendors; (ii) not be in default; (iii) provide us all information and documents we reasonably request including copies of all agreements executed in relation to transfer; (iv) execute a general release; (v) remain liable for pre-transfer obligations; (vi) pay or caused to be paid a transfer fee; and (vii) execute a non-compete agreement. Transferee must (i) meet our criteria; (ii) assume post-transfer obligations; and (iii) execute our then-standard Area Development Agreement. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 45–53)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, a franchisee must execute a non-compete agreement when transferring their Area Development Agreement. Specifically, the franchisee must meet several conditions to gain Cicis's approval for the transfer.
These conditions include paying all outstanding amounts to Cicis, its affiliates, and third-party vendors, as well as not being in default of the agreement. The franchisee must also provide all requested information and documents, including copies of all agreements related to the transfer. Additionally, the franchisee is required to execute a general release and remain liable for any obligations that arose before the transfer. Payment of a transfer fee is also required. Finally, the franchisee must execute a non-compete agreement as part of the transfer conditions.
The transferee, or the party acquiring the Area Development Agreement, must also meet certain criteria. They must satisfy Cicis's standards, assume all obligations after the transfer, and execute Cicis's then-current standard Area Development Agreement. These stipulations ensure that Cicis maintains control over who becomes an Area Developer and that the brand's standards are upheld even when agreements change hands.
This requirement is fairly standard in franchising, as franchisors want to protect their brand and prevent former franchisees from using their knowledge to compete unfairly. The non-compete agreement helps Cicis maintain its competitive advantage and protect its existing franchisees.