If a Cicis franchise agreement is executed pursuant to a development agreement, does the post-term non-compete apply within the development area?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
- (2) for a continuous uninterrupted period commencing upon the expiration or termination of, or a Transfer (defined below) described in, this Agreement and continuing for two (2) years thereafter, except as we otherwise approve in writing, neither you nor any of your Owners and Operator (and members of their immediate family) will, directly or indirectly, for yourselves, or through, on behalf of, or in conjunction with any other Person, by direct inducement or otherwise, engage in any activities described in Section 9.C(1) above in respect of any Competing Business:
- (a) at the Location; or
- (b) within the Protected Area; or
- (c) if this Agreement is executed pursuant to a development agreement, within the development area described therein; or
- (d) within a 10-mile radius of (i) the Location, (ii) the Protected Area, (iii) the development area, if applicable, or (iv) any Cicis Restaurant or other Cicis-branded food service facility in existence or under construction as of the date of this Agreement or at the commencement of the obligation described in this Section 9.C(2).
If any person restricted by this Section 9C(2) fails to comply with the foregoing obligations as of the date of expiration, termination, or Transfer, the 2-year restricted period for that person will commence on the date the person begins to comply 9C(2), which may be the date a court order is entered enforcing this provision.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, if a franchise agreement is executed under a development agreement, the post-term non-compete extends to the development area. Specifically, for a period of two years after the termination or transfer of the agreement, the franchisee and their owners/operators (including immediate family) are restricted from engaging in any competing business activities.
This restriction applies not only to the specific location of the Cicis restaurant or its protected area but also, crucially, to the entire development area outlined in the development agreement. Additionally, the non-compete extends to a 10-mile radius of the restaurant location, the protected area, the development area (if applicable), and any existing or under-construction Cicis restaurant or branded food service facility.
It's important to note that if a person fails to comply with these non-compete obligations upon the expiration, termination, or transfer of the agreement, the two-year restricted period will only begin when they actually start complying with the terms. This could potentially be the date a court order is issued to enforce the provision, meaning the non-compete period could be effectively extended due to non-compliance.