If a Cicis franchisee admits insolvency in writing, can Cicis terminate the agreement immediately?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
If any such default is not cured within the specified time, or such longer period the Laws may require, we may terminate this Agreement effective immediately on written notice to you.
C. Alternative Remedies. 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.
16. POST TERMINATION
Upon the expiration or termination of this Agreement, all rights granted to you hereunder will immediately terminate, and:
- A.
Cease Operations.
You must immediately cease to operate your Restaurant under this Agreement, and you must not thereafter, directly or indirectly, represent to the public or hold yourself out as our present or former franchisee.
- B.
Cease Use of the Marks and Confidential Information.
You must immediately and permanently cease to use, in any manner whatsoever, and return to us (or, at our direction, destroy) any Confidential Information and cease to use the mark "Cicis" and all other Marks.
If you fail to promptly de-identify your Restaurant in accordance with our then-current System Standards, then we will have the right to cure deficiency, and you must reimburse us for all costs we incur in curing such deficiency.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
The 2025 Cicis Franchise Disclosure Document outlines the conditions under which Cicis can terminate a franchise agreement. If a franchisee defaults on the agreement and fails to correct the issue within the specified time frame, Cicis has the right to terminate the agreement immediately by providing written notice.
According to the FDD, Cicis also has the option to require the franchisee to cease operating the restaurant until the default is resolved or until Cicis exercises its right to terminate the agreement. This alternative remedy does not waive Cicis's right to terminate the agreement later. 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 the suspension.
Upon termination of the agreement, the franchisee must immediately cease operating as a Cicis restaurant and discontinue using Cicis's trademarks and confidential information. Failure to de-identify the restaurant according to Cicis's standards allows Cicis to rectify the deficiency, with the franchisee responsible for reimbursing all associated costs. However, the document does not specifically state that admitting insolvency in writing is grounds for immediate termination, but rather that termination can occur if any default is not cured within the specified time.
Therefore, while admitting insolvency might trigger a default under the franchise agreement, the ability of Cicis to terminate immediately depends on whether the insolvency constitutes an incurable default as defined in the agreement. A prospective franchisee should clarify with Cicis what specific financial conditions constitute a default and what cure periods, if any, apply to such defaults.