How is Section 4.C of the Cicis Franchise Agreement modified by the Underperforming Incentive Program Addendum?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
- Modification of Royalty Fees. Section 4.C of the Franchise Agreement is supplemented and amended by adding the following to the end of the Section:
Provided you remain a participant in the Program (as we determine in our sole discretion) and are in good standing, for Net Sales generated through the 1st anniversary of the Opening Date of the Restaurant, the Royalty Fee will be calculated at 3% of those Net Sales. If, at any time prior to the 1st anniversary of the Opening Date, you cease to be either approved to participate in the Program or in good standing, the foregoing Royalty Fee reduction will automatically, and without any further notice, be null and void, and the Royalty Fee will thereafter be calculated as described in Section 4.C without regard to this paragraph.
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 modifies Section 4.C of the Franchise Agreement, which pertains to royalty fees. The addendum stipulates that, provided the franchisee remains a participant in the Program and is in good standing, the royalty fee will be calculated at a reduced rate of 3% of Net Sales generated through the first anniversary of the restaurant's opening date.
However, this reduced royalty fee is contingent upon the franchisee's continued participation in the Program and maintenance of good standing. If, at any point before the first anniversary of the opening date, the franchisee ceases to be approved for the Program or falls out of good standing, the royalty fee reduction becomes null and void automatically, without any further notice. In such cases, the royalty fee will revert to the rate described in Section 4.C of the Franchise Agreement, without considering the terms of this addendum.
This modification offers a potential benefit to franchisees who qualify for and maintain their eligibility in the Underperforming Incentive Program by reducing their royalty fee for the first year of operation. However, it also introduces a risk, as failure to remain in good standing or maintain program approval will result in the immediate loss of this reduced rate, potentially impacting the franchisee's financial projections and profitability.