Under the Cicis Development Incentive Program Addendum, what agreements must the franchisee and its affiliates comply with to maintain 'Good Standing'?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
"Good Standing" means that you and your affiliates, as applicable, are in compliance with all material obligations under the Development Agreement (including the Development Schedule), all Franchise Agreements between us and you or them, whether or not executed pursuant to the Development Agreement, and all other agreements between us and you or your affiliates. You agree that we will have sole discretion to determine whether particular obligations are "material" for purposes of determining good standing, and our decision will be final.
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, maintaining 'Good Standing' under the Development Incentive Program Addendum requires the franchisee and its affiliates to comply with all material obligations under several agreements. Specifically, this includes the Development Agreement (including the Development Schedule), all Franchise Agreements between Cicis and the franchisee or their affiliates, whether or not these agreements were executed pursuant to the Development Agreement, and all other agreements between Cicis and the franchisee or their affiliates.
Compliance with these agreements is crucial because 'Good Standing' is a prerequisite for participating in the Development Incentive Program. If a franchisee or their affiliates fail to maintain 'Good Standing', Cicis reserves the right to revoke certain benefits, such as reductions in the Development Fee and Initial Franchise Fee. If these reductions are revoked, the franchisee will be required to pay the full Development Fee and Initial Franchise Fees as outlined in the Development Agreement and Qualifying Franchise Agreements.
Cicis retains sole discretion to determine whether particular obligations are 'material' for the purpose of assessing 'Good Standing,' and their decision is considered final. This means that Cicis has the authority to decide which obligations are critical for compliance, giving them significant control over the franchisee's participation in the Development Incentive Program. Prospective franchisees should carefully review all agreements and understand their obligations to ensure they can maintain 'Good Standing' and continue to benefit from the program incentives.
This level of franchisor discretion is not uncommon, but it places a heightened importance on understanding the franchisor's expectations and maintaining open communication to address any potential compliance issues proactively. A prospective Cicis franchisee should seek clarification from Cicis regarding what specific actions or inactions could be deemed a material breach of these agreements.