If the transferee of a Cicis franchise is a legal entity, who must execute the agreement assuming liability?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) the transferee must enter into a written agreement, in form and substance satisfactory to us, assuming full, unconditional, joint and several liability for, and agreeing to perform from the date of the transfer, all obligations, covenants, and agreements contained in this Agreement; and, if the transferee is a legal entity, each of the transferee's owners as we designate must execute such agreement and jointly assume and guarantee the entity's performance of all such obligations, covenants, and agreements;
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, if a Cicis franchisee transfers their franchise to another party, several conditions must be met. If the new franchisee, or transferee, is a legal entity (like a corporation or LLC), the entity itself must enter into a written agreement that Cicis finds satisfactory. This agreement means the legal entity is fully and unconditionally liable for all the obligations outlined in the original franchise agreement from the date of the transfer forward.
Furthermore, Cicis specifies that the owners of the legal entity, as designated by Cicis, must also sign this agreement. By signing, these owners jointly assume and guarantee that the entity will perform all the obligations, covenants, and agreements in the franchise agreement. This requirement provides Cicis with an additional layer of security, ensuring that individuals with a vested interest in the legal entity are personally responsible for upholding the franchise agreement terms.
This is a fairly standard practice in franchising. Franchisors often require personal guarantees from the owners of a legal entity to ensure accountability. This protects Cicis in case the legal entity fails to meet its obligations. A prospective franchisee should carefully review these requirements and understand the full extent of the personal liability they are undertaking before proceeding with a franchise transfer.