What specific section of the Cicis Franchise Agreement is supplemented and amended regarding Royalty Fees?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
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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, Section 4.C of the Franchise Agreement is the specific section that is supplemented and amended with regards to Royalty Fees. This amendment is part of the Underperforming Incentive Program.
Under this program, Cicis may offer reduced royalty fees to franchisees who qualify and remain in good standing. For instance, the royalty fee could be 2% of Net Sales from the Effective Date through the day preceding the first anniversary, then 3% of Net Sales from the first to the second anniversary of the Effective Date. After the second anniversary, the royalty fee reverts to the rate specified in the original Section 4.C of the Franchise Agreement.
However, these reduced royalty fees are contingent on the franchisee and their affiliates remaining in good standing as defined in the Underperforming Incentive Program Addendum. If a franchisee fails to maintain good standing, the reduced royalty fees are nullified, and the standard royalty fee as described in Section 4.C of the Franchise Agreement applies. This modification provides a potential financial incentive for franchisees participating in the Underperforming Incentive Program, but it also carries the risk of reverting to the standard royalty fee if the franchisee does not meet the program's requirements.