Who is a Cicis franchisee obligated to pay sums to after termination?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
rnet websites, listings, services, search engines, or systems. You agree to assign all such items to us and to execute and deliver to us all forms and documents required to effect the transfer of, and to authorize third parties to transfer, all such items.
- L. Assignment of Option Rights. We have the right to assign to any other party, without your consent, any and all of our options under Sections 16.I, 16.J and 16.K.
- M. Pay Damages Resulting from Our Lost Revenue. If we terminate this Agreement because of your breach or if you terminate this Agreement without cause, you and we agree that it would be difficult, if not impossible, to determine the amount of damages that we would suffer due to the loss or interruption of the revenue stream we otherwise would have derived from your continued payment of Royalty Fees, and that the Fund and Cooperatives would have otherwise derived from your continued contributions to those funds, through the remainder of the Term. Therefore, you and we agree that a reasonable estimate of such damages, less any cost savings we might have experienced (the "Lost Revenue Damages"), is an amount equal to the net present value of the Royalty Fees, Fund Contributions and Minimum Cooperative Contributions that would have become due had this Agreement not been terminated, from the last date of regular operations of your Restaurant in compliance with this Agreement to the earlier of: (a) 104 weeks following the termination of the Agreement, or (b) the originally scheduled expiration of the Term (the "Measurement Period"). For the purposes of this Section, Lost Revenue Damages shall be calculated as
follows: (1) the number of weeks in the Measurement Period, multiplied by (2) the aggregate of the Royalty Fee, Fund Contribution and Minimum Cooperative Contribution percentages, multiplied by (3) the average weekly Net Sales of your Restaurant during the 52 full weeks months immediately preceding the last date of regular operations of your Restaurant in compliance with this Agreement; provided, that if as of the last date of regular operations of your Restaurant, your Restaurant has not been operating for at least 52 calendar weeks, the average weekly Net Sales of all Cicis Restaurants operating under the Marks during the entirety of our fiscal year immediately preceding the termination date or, as applicable the closing date.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to the 2025 Cicis Franchise Disclosure Document, a franchisee may be obligated to pay Cicis damages resulting from lost revenue if the Franchise Agreement is terminated due to the franchisee's breach or if the franchisee terminates the agreement without cause. These damages, referred to as "Lost Revenue Damages," are estimated based on the net present value of Royalty Fees, Fund Contributions, and Minimum Cooperative Contributions that Cicis and related entities would have received had the agreement remained in effect.
The calculation of Lost Revenue Damages involves several factors. First, the number of weeks in the Measurement Period is determined, which is the shorter of 104 weeks following termination or the remaining term of the agreement. This figure is then multiplied by the aggregate of the Royalty Fee, Fund Contribution, and Minimum Cooperative Contribution percentages. Finally, this result is multiplied by the average weekly Net Sales of the restaurant over the 52 weeks immediately preceding the last date of regular operations. If the restaurant operated for less than 52 weeks, the average weekly Net Sales of all Cicis restaurants during the preceding fiscal year is used instead.
In addition to Lost Revenue Damages, the franchisee may also be responsible for reimbursing Cicis for costs incurred to de-identify the restaurant if the franchisee fails to do so promptly according to System Standards. This could involve removing signs, decor, and other materials that identify the premises as a Cicis restaurant. The franchisee is obligated to assign all relevant items to Cicis and execute necessary documents to facilitate the transfer. These financial obligations underscore the importance of fulfilling the terms of the Franchise Agreement and the potential financial repercussions of termination.