Must the transferee assume post-transfer obligations when taking over a Cicis Area Development Agreement?
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. |
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, a transferee taking over an Area Development Agreement must assume post-transfer obligations. This requirement is part of the conditions Cicis sets for approving the transfer of an Area Development Agreement. The transferee must also meet Cicis's criteria and execute the then-standard Area Development Agreement.
This means that if a franchisee wishes to sell or transfer their Area Development Agreement to another party, the new party (transferee) will be responsible for all the obligations outlined in the Area Development Agreement from the point of transfer forward. These obligations could include developing a certain number of Cicis restaurants within a specific timeframe, maintaining brand standards, and paying ongoing fees.
For a prospective franchisee looking to potentially sell their Area Development Agreement in the future, this condition is important because it affects the pool of potential buyers. Buyers must be willing and able to take on all future responsibilities, which could be a significant financial and operational undertaking. The original franchisee remains liable for pre-transfer obligations, so ensuring the transferee is capable of fulfilling the agreement's terms is crucial for a smooth transfer process.
This requirement is fairly standard in franchising, as franchisors like Cicis want to ensure that any new developer is fully committed to the brand and capable of upholding the standards of the franchise system. By requiring the transferee to assume post-transfer obligations and meet specific criteria, Cicis aims to maintain consistency and quality across its franchise network.