If a Cicis franchisee transfers their franchise, when does the two-year non-compete period begin?
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, the two-year non-compete period begins upon the transfer of the franchise. This means that once the transfer is complete, the franchisee, their owners, and operator (including immediate family members) are restricted from engaging in any competing business activities as defined in Section 9.C(1). This restriction applies for two years, unless Cicis approves otherwise in writing.
The non-compete restrictions apply specifically to the location of the Cicis franchise, the protected area around it, or, if applicable, the development area outlined in the development agreement. It also extends to a 10-mile radius of the franchise location, the protected area, the development area (if applicable), or any existing or under-construction Cicis restaurant or branded food service facility at the time of the agreement or when the non-compete obligation starts.
However, if the person bound by the non-compete fails to comply with these obligations at the time of the transfer, the two-year restricted period will only begin when they actually start complying with the terms of Section 9C(2). This could be the date a court order is issued to enforce the provision, meaning the non-compete clock doesn't start until compliance begins, even if that's after the transfer date. This clause ensures Cicis can enforce the non-compete agreement effectively, even if there's an initial period of non-compliance following the transfer.