Does the Cicis indemnification agreement continue after the franchise agreement expires or terminates?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
If we terminate this Agreement because of your breach or if you terminate this Agreement without cause, you and we agree that it would be difficult, if not impossible, to determine the amount of damages that we would suffer due to the loss or interruption of the revenue stream we otherwise would have derived from your continued payment of Royalty Fees, and that the Fund and Cooperatives would have otherwise derived from your continued contributions to those funds, through the remainder of the Term.
Therefore, you and we agree that a reasonable estimate of such damages, less any cost savings we might have experienced (the "Lost Revenue Damages"), is an amount equal to the net present value of the Royalty Fees, Fund Contributions and Minimum Cooperative Contributions that would have become due had this Agreement not been terminated, from the last date of regular operations of your Restaurant in compliance with this Agreement to the earlier of: (a) 104 weeks following the termination of the Agreement, or (b) the originally scheduled expiration of the Term (the "Measurement Period").
For the purposes of this Section, Lost Revenue Damages shall be calculated as
follows: (1) the number of weeks in the Measurement Period, multiplied by (2) the aggregate of the Royalty Fee, Fund Contribution and Minimum Cooperative Contribution percentages, multiplied by (3) the average weekly Net Sales of your Restaurant during the 52 full weeks months immediately preceding the last date of regular operations of your Restaurant in compliance with this Agreement; provided, that if as of the last date of regular operations of your Restaurant, your Restaurant has not been operating for at least 52 calendar weeks, the average weekly Net Sales of all Cicis Restaurants operating under the Marks during the entirety of our fiscal year immediately preceding the termination date or, as applicable the closing date.
You agree to pay us Lost Revenue Damages, as calculated in accordance with this Section, within 15 days after this Agreement expires or is terminated, or on any late
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to the 2025 Cicis Franchise Disclosure Document, the indemnification obligations of the franchisee to Cicis survive the termination or expiration of the franchise agreement. Specifically, if Cicis terminates the agreement due to the franchisee's breach, or if the franchisee terminates the agreement without cause, the franchisee is responsible for paying Cicis for lost revenue damages.
The FDD states that these lost revenue damages are calculated based on the net present value of Royalty Fees, Fund Contributions, and Minimum Cooperative Contributions that Cicis would have received had the agreement not been terminated. This calculation considers the period from the last date of regular restaurant operations to either 104 weeks following termination or the originally scheduled expiration of the agreement, whichever comes first.
The calculation of Lost Revenue Damages involves multiplying the number of weeks in the Measurement Period by the aggregate of the Royalty Fee, Fund Contribution, and Minimum Cooperative Contribution percentages, and then multiplying that result by the average weekly Net Sales of the restaurant during the 52 full weeks immediately preceding the last date of regular operations. If the restaurant has not been operating for at least 52 weeks, the average weekly Net Sales of all Cicis Restaurants operating under the Marks during the entirety of Cicis's fiscal year immediately preceding the termination date is used instead.
The franchisee is required to pay these Lost Revenue Damages to Cicis within 15 days after the franchise agreement expires or is terminated, or on any later date that Cicis specifies in writing. This financial obligation continues even after the franchise agreement is no longer in effect, highlighting a significant financial responsibility for the franchisee upon termination under the specified conditions.