What is the impact of an affiliate's default on a Cicis franchisee's 'Good Standing' under the Underperforming Incentive Program?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
eements, at least five (5) Cicis Pizza Restaurants. In light of your acquisition of the Development Rights and your agreement to remain in good standing (as defined below), we have agreed to allow you to participate in our Development Incentive Program (the "Program") with respect to the Development Agreement and Franchise Agreements that you or your affiliates execute pursuant to the Development Agreement from and after the Effective Date of this Addendum (the "Qualifying Franchise Agreements"). We may revoke your participation in the Program if, at any time, we determine that you no longer qualify to participate.
-
- Reduction of Development and Initial Franchise Fees. Section 3 of the Development Agreement is supplemented and amended by adding the following to the end of the Section:
While you are approved to participate in the Program and provided you and your affiliates remain in good standing, we agree that the Development Fee will be reduced to $10,000 times the total number of Restaurants to be developed hereunder, and the Initial Franchise Fee under each Qualifying Franchise Agreement shall be reduced to $10,000. We reserve the right to revoke the foregoing reductions at any time you are no longer approved to participate in the Program or you ceas
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, a franchisee's "Good Standing" under the Underperforming Incentive Program is contingent on both the franchisee and their affiliates complying with all material obligations. This includes obligations under the Development Agreement, all Franchise Agreements between Cicis and the franchisee or their affiliates, and any other agreements between Cicis and the franchisee or their affiliates.
If a franchisee or any of their affiliates fails to meet these material obligations, they will not be considered in "Good Standing." Cicis retains the sole discretion to determine what constitutes a "material" obligation, and their decision is final.
The loss of "Good Standing" can have significant financial repercussions for a Cicis franchisee. If a franchisee loses "Good Standing", Cicis can revoke benefits associated with the Underperforming Incentive Program. These benefits may include reductions in the Development Fee and Initial Franchise Fee. For example, the Development Fee could increase from $10,000 times the number of restaurants to be developed, and the Initial Franchise Fee could revert to the full amount required under the agreements. Therefore, it is critical that franchisees and their affiliates remain compliant with all agreements to maintain "Good Standing" and retain the program's benefits.