After transferring an Area Development Agreement, does the original Cicis franchisee remain liable for pre-transfer obligations?
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 franchisee who transfers their Area Development Agreement remains liable for obligations that occurred before the transfer. Specifically, to gain Cicis's approval for the transfer, the franchisee must execute a general release and meet several conditions.
These conditions include paying all amounts due to Cicis, its affiliates, and third-party vendors, and not being in default of the agreement. The franchisee must also provide all requested information and documents, including copies of agreements related to the transfer, pay a transfer fee, and comply with non-compete agreements.
This means that even after transferring the Area Development Agreement to a new franchisee, the original franchisee is still responsible for any outstanding debts, unresolved defaults, or other unfulfilled obligations that arose before the transfer date. This provision protects Cicis by ensuring that franchisees cannot escape their financial or contractual responsibilities simply by transferring the agreement.
For a prospective Cicis franchisee, this highlights the importance of fulfilling all obligations under the Area Development Agreement before considering a transfer. Failure to do so could result in continued liability even after the transfer is complete.