What happens if Cicis fails to exercise a right arising out of a breach by the franchisee?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
Without limiting any of our rights set forth above, if at any time we have, but have not yet exercised, our right to terminate this Agreement for any reason, we may, in our sole discretion, in addition to other remedies we might have and without waiving any rights with respect to the default, require that you cease operating your Restaurant until the earlier of the default which serves as the basis for our right to terminate is cured or we exercise our right to terminate. You hereby waive all claims against us and our affiliates arising from any suspension provided for in this Section 15.C, and you hereby indemnify us against any claims brought by any third parties arising out of our exercise of our rights under this Section 15.C, in connection with your indemnity obligations set forth in Section 14 above.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Cicis retains the right to pursue alternative remedies even if they initially choose not to terminate the agreement due to a franchisee's breach. Specifically, Cicis can require the franchisee to cease operating their restaurant until the default is resolved or until Cicis decides to terminate the agreement. This allows Cicis flexibility in addressing breaches without immediately resorting to termination.
This provision has significant implications for prospective Cicis franchisees. It means that even if a breach doesn't automatically lead to termination, Cicis has the power to suspend operations, which could severely impact the franchisee's revenue and reputation. The franchisee also waives all claims against Cicis and its affiliates arising from any suspension, and must indemnify Cicis against third-party claims resulting from Cicis's exercise of these rights. This places a considerable burden on the franchisee to ensure compliance and to bear the risks associated with any operational suspension.
In essence, Cicis maintains multiple options when a franchisee is in default. They can terminate the agreement, pursue other remedies, or require the franchisee to temporarily cease operations. The franchisee bears the risk of operational suspension and related liabilities, highlighting the importance of adhering to the franchise agreement and promptly addressing any defaults. This is a fairly common practice in franchising, where franchisors seek to maintain brand standards and protect their interests while retaining flexibility in dealing with franchisee issues.