What is a Cicis franchisee required to do regarding taxes and other debts incurred in connection with their franchise activities?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
12. DEBTS AND TAXES
- A. Payment of Taxes and Other Obligations. You will promptly pay when due all Taxes (as defined below), levied or assessed, and all accounts and other indebtedness of every kind incurred by you in connection with your activities under this Agreement. Each payment to be made to use hereunder will be made free and clear and without deduction for any Taxes. "Taxes" means any present or future taxes, levies, imposts, duties or other charges of whatsoever nature, including any interest or penalties thereon, imposed by any government or political subdivision of such government on or relating to the conduct of your activities under this Agreement, the payment of monies, or the exercise of rights granted pursuant to this Agreement, except Taxes imposed on or measured by our net income.
- B. Disputed Liability. In the event of any bona fide dispute as to your liability for Taxes assessed or other indebtedness, you may contest the validity or the amount of the Tax or indebtedness in accordance with the procedures of the taxing authority or applicable Law. However, in no event will you permit a tax sale or seizure by levy of execution or similar writ or warrant or attachment by a creditor to occur against the premises of your Restaurant or any improvements thereon.
- C. Credit Standing. You recognize that your failure to make payments or repeated delays in making prompt payments under or in accordance with the terms of agreements, invoices, and other statements for purchases of products or services will result in a loss of credit rating or standing which will be detrimental
to the goodwill associated with the Marks and the System. Except for payments which are disputed by you in good faith, you will promptly pay when due all amounts you owe us, our affiliates, and other suppliers.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, franchisees are responsible for promptly paying all taxes, accounts, and other debts incurred through their franchise activities. These taxes include any present or future taxes, levies, imposts, duties, or other charges imposed by any government on the conduct of the franchisee's activities, payments of monies, or the exercise of rights granted under the Franchise Agreement, but do not include taxes imposed on or measured by Cicis's net income. Payments made to Cicis must be free and clear of any tax deductions.
If a franchisee has a legitimate dispute regarding their liability for taxes or other debts, they may contest the validity or amount through the procedures of the taxing authority or applicable law. However, the franchisee cannot allow a tax sale or seizure of the restaurant premises or any improvements on it due to levy of execution, writ, warrant, or attachment by a creditor.
Furthermore, the franchisee's credit standing is important to the goodwill associated with the Cicis brand. Failure to make payments or repeated delays in payments for products or services can negatively impact this goodwill. Therefore, franchisees must promptly pay all amounts owed to Cicis, its affiliates, and other suppliers, except for payments disputed in good faith.