Under the Cicis franchise agreement, what constitutes a material obligation?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
vided us with certain supporting materials (the "Application Materials"). We are willing to grant your request on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of their respective undertakings and commitments set forth herein, the receipt and sufficiency of which are acknowledged, you and we agree as follows:
AGREEMENT
1. GRANT
A. Grant of Rights. In reliance on the Application Materials, we hereby grant you the right and license, and you hereby accept the right and obligation, to use the System (including the Marks) to develop, own and operate a Cicis Restaurant, of the type indicated on Attachment A or Attachment A-1 hereto, during the Term (defined below), at the Location (defined below), and strictly and solely in accordance with this Agreement. Your right and obligation to develop, own and operate a Cicis Restaurant is referred to herein as the "Franchise," and the Cicis Restaurant you develop and own under this Agreement is referred to herein as your "Restaurant."
B. Location; Protected Area and Reserved Rights.
(1) Your Restaurant may be developed and operated only at a location upon which you and we agree, in writing (the "Location"). If you and we have agreed upon the Location when this Agreement is executed, it is identified on Attachment A hereto. If you and we have not yet agreed upon the Location, it is your responsibility to secure our agreement as to your Location within 120 days following the Effective Date. You must, at your expense, find and propose to us a location within the geographic area described on Attachment A ("Designated Area") that you believe meets our then-current site criteria and to submit any information about the location that we request in order to assess your proposal. We may, but will not be required to, conduct an on-site inspection of your proposed location.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the Cicis franchise agreement outlines several obligations for both the franchisor and the franchisee. A key obligation for the franchisee is to develop, own, and operate a Cicis Restaurant strictly and solely in accordance with the franchise agreement. This includes using the Cicis System and Marks. The franchisee must also secure the franchisor's written agreement on the restaurant's location within 120 days of the agreement's effective date.
Another material obligation for Cicis franchisees involves financial contributions. Franchisees must contribute 5% of their restaurant's net sales to the marketing fund and spend at least 1% of net sales on local marketing programs. Compliance with marketing program requirements and specifications, including using designated vendors, is also mandatory. Furthermore, franchisees are responsible for the costs associated with purchasing products or ingredients from designated suppliers for limited-time offers (LTOs).
Additionally, the franchise agreement emphasizes compliance with the Cicis System and protection of the brand's intellectual property. Franchisees must adhere to all established requirements and specifications and use designated vendors for marketing programs. Cicis retains control over the Cicis Website and any internal communications network, and franchisees must use these resources in compliance with all applicable laws and standards. The agreement also stipulates that termination of the franchise agreement constitutes a non-curable default under the lease, highlighting the interconnectedness of the franchise, lease, and operational obligations.