Must the transferee of a Cicis franchise enter into a written agreement assuming the obligations of the Franchise Agreement?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
(d) the transferee must enter into a written agreement, in form and substance satisfactory to us, assuming full, unconditional, joint and several liability for, and agreeing to perform from the date of the transfer, all obligations, covenants, and agreements contained in this Agreement; and, if the transferee is a legal entity, each of the transferee's owners as we designate must execute such agreement and jointly assume and guarantee the entity's performance of all such obligations, covenants, and agreements;
(e) the transferee must execute, for a term ending on the expiration date of this Agreement and with such renewal terms as may be provided by this Agreement, our thencurrent standard form of franchise agreement and all other ancillary agreements as we may require, which agreements will supersede this Agreement and its ancillary documents in all respects and the terms of which agreements may differ from the terms of this Agreement, including a higher percentage Royalty Fee and Fund Contribution or expenditure requirement; provided, however, that the transferee will not be required to pay any initial franchise fee; and, if the transferee is legal entity, such of transferee's owners as we may designate must execute such agreement and jointly assume and guarantee the entity's performance of all such obligations, covenants, and agreements;
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, if a franchisee transfers their franchise to a new owner, the transferee must enter into a written agreement with Cicis. This agreement must be satisfactory to Cicis and include the transferee's commitment to assume full, unconditional, joint, and several liability for all obligations outlined in the original Franchise Agreement from the date of transfer. If the transferee is a legal entity, Cicis may require the owners of the entity to also execute the agreement, jointly assuming and guaranteeing the entity's performance.
In addition to assuming the existing Franchise Agreement, the transferee may also be required to execute Cicis's then-current standard form of franchise agreement. This new agreement would run for a term ending on the original agreement's expiration date, including any renewal terms. This new agreement would supersede the original agreement and could contain different terms, such as higher royalty fees or fund contribution requirements. However, the transferee will not be required to pay an initial franchise fee in this case.
This requirement ensures that Cicis maintains consistent standards and protects its interests when a franchise changes ownership. The new owner is bound by the same obligations as the original franchisee, and Cicis has the option to update the agreement to reflect current terms and conditions. The transferee must also demonstrate that they meet Cicis's criteria for prospective franchisees and may be required to renovate the restaurant to meet current system standards.