What is the relationship between the Effective Date of the Franchise Agreement and the Effective Date of the Cicis Underperforming Incentive Program Addendum?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
On Smile LLC ("we") and the "Franchisee" identified below ("you" and, together with us, the "Parties") execute this Underperforming Incentive Program Addendum (the "Addendum") to supplement and amend that certain Franchise Agreement the Parties have executed immediately prior to the execution of this Addendum (as it might have otherwise been amended, the "Franchise Agreement"). The "Effective Date" of this Addendum is the same as the Effective Date of the Franchise Agreement. Terms used but not defined in this Addendum have the meanings given them in the Franchise Agreement. For valuable consideration, receipt and sufficiency of which are acknowledged, the Parties agree as follows:
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, the Underperforming Incentive Program Addendum supplements and amends the existing Franchise Agreement. The key point is that the Effective Date of the Underperforming Incentive Program Addendum is the same as the Effective Date of the Franchise Agreement. This means that both agreements come into effect simultaneously.
For a prospective Cicis franchisee, this implies that the terms and conditions outlined in the Underperforming Incentive Program Addendum, such as modified royalty fees, are applicable from the very beginning of the franchise agreement, provided the franchisee meets the specified criteria.
Specifically, the Royalty Fee will be 2% of Net Sales from the Effective Date through the day preceding the first anniversary of the Effective Date, 3% of Net Sales from the 1st anniversary to the 2nd anniversary of the Effective Date, and thereafter, the rate specified in Section 4.C of the Franchise Agreement. This is contingent on the franchisee and their affiliates remaining in Good Standing as defined in the Underperforming Incentive Program Addendum. This incentive is designed to support franchisees who may be struggling, but it's crucial to maintain compliance to benefit from the reduced royalty fees.