What is the significance of the 'Effective Date' in the Cicis Underperforming Incentive Program Addendum?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
UNDERPERFORMING INCENTIVE PROGRAM ADDENDUM
(Franchise Agreement)
On Smile LLC ("we") and the "Franchisee" identified below ("you" and, together with us, the "Parties") execute this Underperforming Incentive Program Addendum (the "Addendum") to supplement and amend that certain Franchise Agreement the Parties have executed immediately prior to the execution of this Addendum (as it might have otherwise been amended, the "Franchise Agreement"). The "Effective Date" of this Addendum is the same as the Effective Date of the Franchise Agreement. Terms used but not defined in this Addendum have the meanings given them in the Franchise Agreement. For valuable consideration, receipt and sufficiency of which are acknowledged, the Parties agree as follows:
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- 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:
We agree that, provided you and your affiliates remain in Good Standing (as defined in the Underperforming Incentive Program Addendum), the Royalty Fee will be as follows: (i) 2% of Net Sales derived from the Effective Date through the day preceding the first anniversary of the Effective Date; (ii) 3% of Net Sales derived from the 1st anniversary to the 2nd anniversary of the Effective Date; and (iii) thereafter, the rate specified in Section 4.C of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, the Effective Date in the Underperforming Incentive Program Addendum marks the starting point for certain benefits and obligations outlined in the addendum. The Effective Date of this Addendum is the same as the Effective Date of the Franchise Agreement.
Specifically, the royalty fee modifications are tied to the Effective Date. For instance, the royalty fee will be 2% of Net Sales from the Effective Date through the day preceding the first anniversary of the Effective Date, then 3% of Net Sales from the 1st to the 2nd anniversary of the Effective Date, and thereafter, the rate specified in Section 4.C of the Franchise Agreement. This means the franchisee's financial obligations regarding royalty payments are directly linked to this date.
Moreover, the franchisee must ensure that the information provided in their application for the Underperforming Incentive Program remains true and correct from the date of signing the addendum. The franchisee's eligibility for the program and the associated benefits are contingent upon maintaining 'Good Standing,' as defined in the addendum. Therefore, the Effective Date serves as a crucial reference point for determining the duration and applicability of the incentives offered under this program.