Can a Cicis franchisee pledge their restaurant as collateral without Cicis' written consent?

According to the 2025 Cicis Franchise Disclosure Document, a franchisee's Managing Owner's interest in the franchise must remain free of any pledge, mortgage, hypothecation, lien, charge, encumbrance, voting agreement, proxy, security interest, or purchase right or options, unless otherwise provided in the Franchise Agreement. This means that generally, a franchisee cannot use their interest in the Cicis franchise as collateral without Cicis's consent.

This restriction protects Cicis by ensuring that the franchise operations are not jeopardized by the franchisee's personal financial obligations. If a franchisee were to default on a loan secured by the franchise, it could lead to instability and potentially damage the Cicis brand. By maintaining control over who has a financial interest in the franchise, Cicis can better manage the risk of financial distress affecting the restaurant's operations.

For a prospective Cicis franchisee, this condition means they will need to secure financing through other means that do not involve pledging the franchise itself as collateral, unless Cicis provides explicit consent. This may require franchisees to have other assets or sources of capital to support their business venture. It is important for potential franchisees to discuss financing options and requirements with Cicis during the due diligence process to fully understand the financial obligations and restrictions.

It is fairly common in franchising to have restrictions on pledging the franchise as collateral. Franchisors want to maintain control over the brand and protect it from potential financial issues of the franchisee. Franchisees should carefully review the franchise agreement and discuss any concerns with a legal and financial advisor before signing.