What happens if a bankruptcy petition is filed against a Cicis franchisee?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) you or any Person who guarantees your obligations under this Agreement (i) admits, in writing, your or its insolvency or inability to pay your or its debts as they become due, (ii) makes a general assignment for the benefit of creditors; (iii) files or has filed against you or it a petition under any bankruptcy law, receivership or custodian law, insolvency law, foreclosure law, or any similar Law or statute of the United States or any state thereof intended to protect the rights of your or its creditors; (iv) has a final judgment against you or it that remains unsatisfied or of record for 30 days or longer (unless supersedeas bond is filed); or (v) is dissolved or wound down;
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, the filing of a bankruptcy petition against a franchisee can lead to the termination of the Franchise Agreement. Specifically, if a franchisee or any person who guarantees their obligations admits in writing their insolvency or inability to pay debts, makes a general assignment for the benefit of creditors, or has a bankruptcy petition filed against them, Cicis has grounds to terminate the agreement. This also applies if a final judgment against the franchisee remains unsatisfied for 30 days or longer, or if the franchisee is dissolved or wound down.
This provision protects Cicis by allowing them to sever ties with franchisees who are facing severe financial difficulties. Bankruptcy can indicate an inability to uphold brand standards, meet financial obligations, and maintain the reputation of the Cicis brand. By terminating the agreement, Cicis can mitigate potential damage to its system and brand image.
For a prospective Cicis franchisee, this highlights the importance of maintaining financial stability and meeting all financial obligations. The franchisee should be aware that any significant financial distress that leads to bankruptcy proceedings could result in the loss of their franchise. Additionally, anyone guaranteeing the franchisee's obligations should also be aware that their financial status is relevant to the franchise agreement. It is advisable to seek legal and financial counsel to fully understand the implications of these terms before entering into a franchise agreement with Cicis.