What is the impact of a Cicis franchisee's affiliate failing to timely satisfy monetary obligations owed to Smile LLC on the franchisee's 'Good Standing'?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Definitions. As used in this Amendment, "Good Standing" means that you, your owners, and your affiliates (if any) are not in default of the Franchise Agreement or any other agreement with us or our affiliates; and that you, your owners, and your affiliates have substantially and timely complied with all of the terms and conditions of all such agreements, including the timely satisfaction of all monetary obligations owed to us or our affiliates.
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to the 2025 Cicis Franchise Disclosure Document, a franchisee's "Good Standing" is impacted if the franchisee or their affiliates fail to meet monetary obligations to Cicis or its affiliates. Specifically, if a Cicis franchisee's affiliate does not timely satisfy all monetary obligations owed to Smile LLC, the franchisee will not be considered in "Good Standing".
Maintaining "Good Standing" is crucial for Cicis franchisees because it affects their eligibility for certain benefits, such as participation in the Development Incentive Program. If a franchisee loses "Good Standing", Cicis has the right to revoke benefits like a reduction of the initial franchise fee. For instance, the initial franchise fee could be reduced to $5,000 if the franchisee remains in good standing; however, this reduction can be revoked if good standing is lost.
Cicis retains sole discretion in determining whether obligations are "material" for assessing good standing, and their decision is final. This means Cicis has significant power in deciding what constitutes a failure significant enough to impact a franchisee's "Good Standing".
This policy underscores the importance of franchisees and their affiliates maintaining diligent financial responsibility and open communication with Cicis to ensure all obligations are met promptly. Prospective franchisees should carefully review all agreements and clarify any ambiguities regarding financial obligations to avoid jeopardizing their "Good Standing" and associated benefits.