On what terms can Cicis exercise its 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 has the option to purchase the transferred interest of a franchisee's business. This right of first refusal can be exercised within 30 days after Cicis receives notice of the proposed transfer. The purchase will be on the same terms and conditions that a third party has offered to the franchisee.
This provision means that if a Cicis franchisee decides to sell their business, Cicis has the first opportunity to buy it before the franchisee can sell to someone else. This is a common practice in franchising, allowing the franchisor to maintain control over the brand and the quality of franchisees within the system.
For a prospective franchisee, this implies that selling the business might not always be a straightforward process. While they can find a buyer, Cicis has the ultimate say in who takes over the franchise. It is important for franchisees to understand this right of first refusal and factor it into their long-term business plans and exit strategies. Franchisees should carefully review Section 13.C of the Franchise Agreement and Section 5.F of the Area Development Agreement for complete details.