What is the required action for a Cicis franchisee or their representative upon the death or permanent disability of the franchisee or managing owner?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
in the guaranty made part of this Agreement for at least 90 consecutive days and from which condition recovery within 90 days from the date of determination of disability is unlikely. Permanent disability will be determined by a licensed practicing physician we select (and at our costs), upon examination of the person; or if the person
refuses to submit to an examination, then such person automatically will be deemed permanently disabled as of the date of such refusal for the purpose of this Section 13.D.
- (2) You or your representative must promptly notify, in writing, us of your or your Managing Owner's death or permanent disability. At our request, within a reasonable period of time not to exceed seven (7) days from the date of death or permanent disability, the executor, administrator, or other personal representative of the deceased or disabled person will provide for interim management of your Restaurant until such time as a transfer has been effected in accordance with the provisions of this Section 13.D. Such interim management must be approved by us and must be conducted in accordance with the terms of this Agreement. We may (but are not obligated to) assume such interim management of your Restaurant; provided that (i) our interim management of your Restaurant will not relieve you of your obligations under this Agreement; (ii) we will not be liable for any debts, losses, costs, or expenses incurred in the operation of your Restaurant during any such period of interim management; (iii) we will have the right to charge a reasonable fee for our management services, plus the direct out-of-pocket costs and expenses incurred in the operation of the Restaurant; and (iv) you will, and hereby do, indemnify and hold us harmless against any and all judgments, fines, losses, liabilities, costs, amounts paid in settlement, and reasonable expenses (including, but not limited to attorneys' fees) incurred in connection with our interim management of your Restaurant, except by reason of our gross negligence or willful misconduct. Any Transfer upon death or permanent disability will be subject to the same terms and conditions as described in this Section 13 for any inter vivos Transfer.
- (3) Anything contained in this Section 13.D to the contrary notwithstanding, upon your or your Managing Owner's death or permanent disability, we (or our designee) will have the option, to be exercised in writing within 20 days from the date we receive notice of the death or permanent disability pursuant to Section 13.D.(2) ("Option Period"), to elect to purchase your interest and/or the Managing Owner's interest in this Agreement, your Restaurant, or you, as applicable, as well as the further option to elect to purchase the interest of any other of your Owners (individually, "Interest" and collectively, "Interests") at the price and upon the terms set forth below.
- (a) During the Option Period, the purchase price for the Interests will be determined with reference to the agreed value of your Restaurant ("Agreed Value"), as set forth below. If you are a natural person, then the Agreed Value will be an amount equal to 100% of the Agreed Value. If you are a legal entity, then the purchase price for any Interest will be an amount which bears the same relationship to the Agreed Value as the interest of the Person whose interests are being purchased bears to the total ownership interests in you.
- (b) The Agreed Value will be an amount equal to the Initial Value (defined below), less the total current and long-term liabilities we or our designee assume. The Initial Value will be equal to the following (the "Initial Value"):
- (i) If the triggering death or permanent disability occurs prior to six (6) months following the Opening Date of your Restaurant, then the Initial Value will be an amount equal to your Original Cost (defined below), plus 10%. Your "Original Cost" will include all expenditures you incurred from and after the Effective Date directly related to the development and opening of your Restaurant ("Start Up Expenditures"), including the initial franchise fee paid pursuant to Section 4.A. of this Agreement, any local governmental impact fees, costs incurred for site location, leasehold improvements, equipment, inventory, smallwares, signage, the hiring and training of managers, and other miscellaneous Start Up Expenditures, provided that all
Start Up Expenditures are documented to our reasonable satisfaction, but excluding expenses such as lease deposits, utility deposits, and prepaid expenses to be refunded by third parties, and wages and related benefits paid by you prior to the Opening Date.
- (ii) If the triggering death or permanent disability occurs on or after six (6) months following the Opening Date, but prior to 12 months following the Opening Date, then the Initial Value will be an amount equal to the Net Sales of your Restaurant for the five-month period immediately preceding the month in which the death or permanent disability occurs, annualized, then divided by two.
- (iii)If the triggering death or permanent disability occurs on or after 12 months following the Opening Date, then the Initial Value will be an amount equal to the total Net Sales of your Restaurant for the 12-month period immediately preceding the month in which the death or permanent disability occurs, divided by two.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, in the event of the death or permanent disability of a franchisee or their managing owner, the franchisee or their representative must promptly notify Cicis in writing. Following this notification, Cicis may request that the executor, administrator, or other personal representative provide interim management of the restaurant within seven days of the death or disability, until a transfer of ownership can be arranged. This interim management is subject to Cicis's approval and must adhere to the terms of the franchise agreement.
Cicis has the option, but not the obligation, to assume interim management of the restaurant. If Cicis chooses to manage the restaurant temporarily, the franchisee remains responsible for all obligations under the agreement. Cicis will not be liable for any debts, losses, or expenses incurred during this interim period but can charge a reasonable fee for their management services, including direct out-of-pocket costs. The franchisee must also indemnify Cicis against any liabilities arising from their management, except in cases of gross negligence or willful misconduct by Cicis.
Furthermore, the franchise agreement stipulates that the interests in the franchise and restaurant must be transferred to a Cicis-approved third party within 12 months of the death or, at Cicis's discretion, within six months of notification of permanent disability. The FDD defines "permanent disability" as a condition preventing the franchisee from fulfilling their obligations for at least 90 consecutive days, with recovery unlikely within another 90 days, as determined by a physician selected by Cicis. If the person refuses to submit to an examination, then such person automatically will be deemed permanently disabled as of the date of such refusal.
Any transfer of the franchise due to death or permanent disability is subject to the same terms and conditions as a standard transfer during the franchisee's lifetime. Cicis also retains the option to purchase the franchisee's interest in the agreement and restaurant within 20 days of receiving notice of the death or permanent disability. The purchase price is determined based on the agreed value of the restaurant, which considers factors like the initial investment, net sales, and liabilities assumed by Cicis. The specific calculation varies depending on when the death or disability occurs relative to the restaurant's opening date.