Can Cicis require specific owners of a transferee legal entity to execute an agreement assuming the entity's obligations when a Cicis franchise is transferred?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) the transferee must enter into a written agreement, in form and substance satisfactory to us, assuming full, unconditional, joint and several liability for, and agreeing to perform from the date of the transfer, all obligations, covenants, and agreements contained in this Agreement; and, if the transferee is a legal entity, each of the transferee's owners as we designate must execute such agreement and jointly assume and guarantee the entity's performance of all such obligations, covenants, and agreements;
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, when a franchise is transferred to a legal entity, Cicis can require specific owners of the transferee to execute an agreement. This agreement makes them jointly and severally liable for the obligations of the franchise agreement.
This means that if you are considering purchasing a Cicis franchise through a corporation or LLC, Cicis has the right to demand that certain owners of that entity personally guarantee the franchise's performance. This is a significant point for potential franchisees because it means that your personal assets could be at risk if the franchise does not succeed.
This requirement is fairly common in franchising, as it gives the franchisor additional security that the franchise will be properly managed and that all financial obligations will be met. Prospective franchisees should carefully consider the implications of such a guarantee and seek legal advice before signing any franchise agreement.