Under what conditions might Cicis revoke a franchisee's participation in the Development Incentive Program?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
(the "Addendum") to supplement and amend that certain Area Development Agreement they have executed immediately prior to the execution of this Addendum (as it might have otherwise been amended, the "Development Agreement"). The "Effective Date" of this Addendum is the Effective Date of the Development Agreement. Capitalized terms used but not defined in this Addendum have the meanings given them in the Development Agreement. For valuable consideration, receipt and sufficiency of which are acknowledged, the Parties agree as follows:
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- Approval to Participate in Development Incentive Program. In the Development Agreement, you have agreed to develop or cause your affiliates to develop, in each case pursuant to individual Franchise Agreements, at least five (5) Cicis Pizza Restaurants. In light of your acquisition of the Development Rights and your agreement to remain in good standing (as defined below), we have agreed to allow you to participate in our Development Incentive Program (the "Program") with respect to the Development Agreement and Franchise Agreements that you or your affiliates execute pursuant to the Development Agreement from and after the Effective Date of this Addendum (the "Qualifying Franchise Agreements"). We may revoke your participation in the Program if, at any time, we determine that you no longer qualify to participate.
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- Reduction of Development and Initial Franchise Fees.
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Cicis may revoke a franchisee's participation in the Development Incentive Program if they determine that the franchisee no longer qualifies to participate in the program. Additionally, Cicis can revoke waivers of the development fee and initial franchise fees if the franchisee is no longer approved to participate in the program or ceases to be in good standing. Good standing is defined as compliance with all material obligations under the Development Agreement and all Franchise Agreements between Cicis and the franchisee or their affiliates.
Cicis retains sole discretion to determine whether particular obligations are "material" for purposes of determining good standing, and their decision will be final. This means Cicis has significant power to decide what constitutes a breach of the agreement and whether that breach is serious enough to remove a franchisee from the Development Incentive Program.
For a prospective Cicis franchisee, this highlights the importance of understanding and adhering to all aspects of the Development Agreement and Franchise Agreements. Failure to comply with any obligation that Cicis deems material could result in the loss of incentives, such as reduced development and initial franchise fees. The franchisee would then be responsible for paying the full Development Fee and Initial Franchise Fees as required under the agreements.
This level of franchisor discretion is not uncommon in the franchise industry, but it underscores the need for franchisees to maintain open communication with Cicis and address any potential compliance issues promptly. Franchisees should seek clarity on what Cicis considers "material obligations" to minimize the risk of losing the benefits of the Development Incentive Program.