Who has the sole discretion to determine whether particular obligations are 'material' for purposes of determining good standing for Cicis franchisees?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
te, or a third party unaffiliated with you and was permanently closed or has been temporarily closed for an extensive period. The franchise agreement that previously governed the owner's operation of the Restaurant has been terminated. You and we have entered into the Franchise Agreement to govern your ownership and operation of the previously closed Restaurant from and after the Effective Date.
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- Reopening of the Restaurant. You agree that you will, at your expense, take the actions described on Attachment A hereto to remodel and refresh the Restaurant (the "Refresh Obligations") prior to reopening the Restaurant, and you will complete the Refresh Obligations and reopen the Restaurant for regular business in accordance with the Franchise Agreement by no later than the Reopening D
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Cicis has the sole discretion to determine whether particular obligations are considered "material" when assessing a franchisee's good standing. This determination is final.
This means that Cicis has the power to decide which requirements in the franchise agreement are critical for a franchisee to be considered in good standing. If Cicis deems a franchisee to have failed to meet a 'material' obligation, it can revoke certain benefits, such as a reduction of the initial franchise fee. For example, the initial franchise fee could be reduced to $5,000 if the franchisee remains in good standing. However, Cicis can revoke this reduction if the franchisee is no longer in good standing, requiring the franchisee to pay the full initial franchise fee.
This discretion gives Cicis significant control over the franchise relationship. Prospective franchisees should carefully review the franchise agreement to understand all obligations and how Cicis might interpret their materiality. It is important to recognize that Cicis's decision on what constitutes a material obligation is final, which could impact a franchisee's ability to maintain good standing and receive associated benefits.