If the franchisee for a Cicis franchise is not a natural person, what obligation do the owners of that franchisee have?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are not a natural person, your owners will be required to guarantee and assume your obligations under the agreements, so references to "you" will also include your owners.
Your direct and indirect owners will be required to sign an agreement (the current form of which is attached as Attachment B to the Franchise Agreement and the Area Development Agreement) pursuant to which they each personally assume and guarantee your obligations under the Franchise Agreement and the Area Development Agreement (each a "Guaranty"). If the spouses of your owners are not themselves owners of you, we will require them to sign the Guaranty solely to acknowledge that you are signing it to bind yourself and any marital property. A non-owner spouse is not otherwise obligated under the Guaranty.
Source: Item 1 — The Franchisor and any Parents, Predecessors, and Affiliates (FDD pages 6–8)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, if the entity purchasing the franchise is not a natural person, the owners of that entity are required to guarantee and assume the obligations of the franchisee under the franchise agreements. This means that the owners become personally liable for the entity's performance and adherence to the terms of the Franchise Agreement and Area Development Agreement. This requirement extends to both the Franchise Agreement and the Area Development Agreement if the franchisee is developing multiple Cicis locations.
Specifically, the direct and indirect owners must sign a Guaranty, which is an agreement where they personally assume and guarantee the franchisee's obligations. This ensures that Cicis has recourse to the personal assets of the owners if the franchisee entity fails to meet its financial or operational responsibilities. Even if the spouses of the owners are not themselves owners, Cicis requires them to sign the Guaranty to acknowledge that the entity is binding itself and any marital property, though the non-owner spouse is not otherwise obligated under the Guaranty.
This requirement is a common practice in franchising, as it provides an additional layer of security for the franchisor. By requiring personal guarantees, Cicis aims to ensure that the owners are fully committed to the success of the franchise and are willing to be held accountable for its performance. Prospective franchisees should carefully review the Guaranty and understand the full extent of their personal liability before signing the Franchise Agreement or Area Development Agreement.