Can the Managing Owner of a Cicis franchise have a pledge on their ownership interest?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as may otherwise be provided in this Agreement, the Managing Owner's interest in you will be and will remain free of any pledge, mortgage, hypothecation, lien, charge, encumbrance, voting agreement, proxy, security interest, or purchase right or options.
The Managing Owner must own and maintain at least 25% of the direct ownership interests in you.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, the Managing Owner's interest in the franchise must remain free of any encumbrances. This means the Managing Owner cannot pledge, mortgage, hypothecate, place a lien, charge, encumber, create a voting agreement or proxy, or grant a security interest, purchase right, or options on their ownership interest.
This restriction ensures that the Managing Owner's interest remains unencumbered, likely to maintain their commitment and control over the Cicis restaurant's operations. The Managing Owner must own and maintain at least 25% of the direct ownership interests in the franchise.
This requirement is designed to protect Cicis's interests by ensuring the Managing Owner's focus remains on the business. It prevents the Managing Owner from using their ownership stake as collateral or giving away control through voting agreements, which could potentially destabilize the franchise's management and operations.