Does Cicis have a right of first refusal to acquire a franchisee's business?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in | Summary | |
|---|---|---|---|
| Area Development Agreement – Section 5.C. | Franchise or other Agreement | You must (i) pay all amounts due us and our affiliates and third- party vendors; (ii) not be in default; (iii) provide us all information and documents we reasonably request including copies of all agreements executed in relation to transfer; (iv) execute a general release; (v) remain liable for pre-transfer obligations; (vi) pay or caused to be paid a transfer fee; and (vii) execute a non-compete agreement. Transferee must (i) meet our criteria; (ii) assume post-transfer obligations; and (iii) execute our then-standard Area Development Agreement. | |
| n. Franchisor’s right of first refusal to acquire franchisee’s business | Franchise Agreement – Section 13.C. Area Development Agreement – Section 5.F. | Within 30 days after notice, we have the option to purchase the transferred interest on the same terms and conditions offered by a third party. Within 30 days after notice, we have the option to purchase the transferred interest on the same terms and conditions offered by a third party. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 45–53)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Cicis does retain a right of first refusal to acquire a franchisee's business. Specifically, Cicis has the option to purchase the transferred interest if a franchisee decides to sell their business.
This right of first refusal means that before a Cicis franchisee can sell their business to a third party, they must first offer Cicis the opportunity to purchase the business on the same terms and conditions as the third party's offer. Cicis has 30 days after receiving notice of the proposed transfer to decide whether to exercise its option to purchase the business.
For a prospective franchisee, this clause could provide both benefits and drawbacks. On one hand, it ensures that Cicis has a vested interest in the success of its franchisees, as it has the option to buy back successful locations. On the other hand, it could potentially limit the franchisee's ability to sell to a buyer of their choice or negotiate the most favorable terms, as Cicis always has the option to step in and purchase the business itself.