Can Cicis require the transferee to execute ancillary agreements in addition to the franchise agreement?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
- (e) the transferee must execute, for a term ending on the expiration date of this Agreement and with such renewal terms as may be provided by this Agreement, our thencurrent standard form of franchise agreement and all other ancillary agreements as we may require, which agreements will supersede this Agreement and its ancillary documents in all respects and the terms of which agreements may differ from the terms of this Agreement, including a higher percentage Royalty Fee and Fund Contribution or expenditure requirement; provided, however, that the transferee will not be required to pay any initial franchise fee; and, if the transferee is legal entity, such of transferee's owners as we may 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, a transferee—someone buying an existing Cicis franchise—must adhere to several conditions. Cicis can require the transferee to execute its then-current standard form of franchise agreement, which will supersede the original agreement. The transferee must also sign all other ancillary agreements that Cicis may require. These new agreements will be for a term ending on the original agreement's expiration date, including any renewal terms.
These new agreements may have different terms than the original franchise agreement. These differences can include a higher percentage Royalty Fee and Fund Contribution or expenditure requirement. However, the transferee will not be required to pay any initial franchise fee. Additionally, if the transferee is a legal entity, designated owners must also execute the agreement and guarantee the entity's performance.
This requirement ensures that Cicis can update its franchise agreements and standards when a franchise changes hands. It allows Cicis to impose current terms on the new franchisee, which may include increased fees or marketing expenditure requirements. Prospective transferees should carefully review the current standard form of franchise agreement and any ancillary agreements to understand the full scope of their obligations.