If a Cicis franchisee fails to be in good standing, what happens to their Royalty Fee reduction?

According to Cicis's 2025 Franchise Disclosure Document, if a franchisee fails to remain in good standing under all agreements with Cicis during a Royalty Fee reduction period, the Royalty Fee reduction will automatically become null and void without any further notice. Following this, the Royalty Fee will be calculated as described in the applicable Franchise Agreement, disregarding the Royalty Fee reduction provision of the applicable incentive program addendum. This means the franchisee will lose any reduction they were receiving on their Royalty Fee due to participation in an incentive program.

Several incentive programs could be affected by this stipulation. These include the Veteran's Incentive Program, the Reopen Incentive Program, and the Underperforming Incentive Program. For example, the Veteran's Incentive Program offers reduced royalty fees of 3% of Net Sales until the first anniversary of the restaurant's opening date, and 4% of Net Sales from the day following the first anniversary until the second anniversary. If a franchisee participating in this program fails to stay in good standing, they will immediately revert to paying the standard Royalty Fee as outlined in their Franchise Agreement, which is normally 5% of Net Sales for a Cicis Buffet Restaurant or 6% for a Cicis To Go Restaurant.

This provision underscores the importance of franchisees adhering to all agreements with Cicis to maintain the benefits of any incentive programs. Failure to comply with these agreements can result in a significant increase in ongoing fees, impacting the franchisee's profitability. Prospective franchisees should carefully review all terms and conditions of the Franchise Agreement and any incentive program addenda to ensure they understand the requirements for remaining in good standing and avoiding the loss of Royalty Fee reductions.