How much will Cicis increase the Royalty Fee for non-compliance with the Franchise Agreement?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
ssess a reasonable data collection fee for as long as the information or report remains outstanding. Our assessment of the data collection fee will be in addition to our other rights and remedies. If you do not submit when due the Net Sales report, then we will have the right to assess the data collection fee immediately without notice or an opportunity to cure. Our assessment of the data collection fee will be in addition to our other rights and remedies.
- (3) The Royalty Fee we charge under this Agreement was determined based on the assumption that you will comply with your obligations hereunder. If you do not comply with your obligations, we will incur additional costs and expenses. Therefore, if we determine that you are not in compliance with your obligations under this Agreement, we may charge you a non-compliance fee of $250 for each violation thereof, and your Royalty Fee will be increased by one (1) percentage point until we determine
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, if a franchisee fails to comply with their obligations under the Franchise Agreement, Cicis may increase the Royalty Fee. Specifically, Cicis may charge a non-compliance fee of $250 for each violation. In addition to this fee, the Royalty Fee will be increased by one percentage point.
This increase remains in effect until Cicis determines that the franchisee has corrected all deficiencies and is fully compliant with the terms of the agreement. Once compliance is restored, the Royalty Fee will revert to the original rate specified in Section 4.C of the Franchise Agreement. It is important to note that paying the non-compliance fee does not, by itself, resolve the underlying issue of non-compliance.
The FDD clarifies that the non-compliance fee is intended to compensate Cicis for expenses or losses incurred due to the franchisee's failure to meet their obligations. It is not considered a penalty or a comprehensive measure of all potential damages Cicis might suffer as a result of the non-compliance. This provision ensures that Cicis is compensated for the additional costs and efforts required to address a franchisee's non-compliance, while also incentivizing franchisees to maintain adherence to the Franchise Agreement.
For a prospective Cicis franchisee, this means that maintaining compliance with all aspects of the Franchise Agreement is crucial to avoid increased costs. Franchisees should prioritize understanding and adhering to all requirements to prevent the imposition of non-compliance fees and increases to their Royalty Fee, which would directly impact their profitability.