Upon expiration or termination of the Cicis franchise agreement, what options does Cicis have regarding the franchisee's location and assets?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
- J.
Our Option to Acquire Leases and Other Assets.
- (1) On expiration (without renewal) or termination of this Agreement, we have the option (the "Option") to acquire from you, free and clear of all liens, any or all of the following: (i) the right to possess the Location (including the right to purchase the land and/or building if you own them), (ii) any equipment leases, (iii) any or all transferrable permits and licenses pertaining to the operation of your Restaurant, and/or (iv) any or all of the physical assets used in or resulting from the operation of your Restaurant, including furnishings, equipment, signs, small wares, fixtures, motor vehicles, supplies, and inventory.
We must exercise the Option by providing you with written notice of our election within 30 days following expiration or termination of this Agreement (the "Option Notice").
In the Option Notice, we will list the categories of items that we intend to purchase.
- (2) The purchase price for the items we describe in our Option Notice (the "Option Assets") will be fair market value.
We and you will first attempt to mutually agree on the fair market value of the Option Assets.
If, at any time, either party decides that mutual agreement will not be reached, it (the "First Side") may give written notice ("FMV Notice") to the other side (the "Second Side") demanding that fair market value be determined through appraisal and including the name of a certified and independent appraiser selected by the First Side.
Within 10 days after delivery of the FMV Notice, the Second Side will notify the First Side, in writing, of its selected certified and independent appraiser, failing which, the fair market value will be determined solely by the appraiser selected by the First Side.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to the 2025 Cicis Franchise Disclosure Document, upon expiration or termination of the franchise agreement, Cicis has the option to acquire certain assets from the franchisee. Cicis can acquire the right to possess the restaurant location, including purchasing the land or building if the franchisee owns them. Additionally, Cicis can acquire equipment leases, transferable permits and licenses related to the restaurant's operation, and physical assets such as furnishings, equipment, signs, small wares, fixtures, motor vehicles, supplies, and inventory.
To exercise this option, Cicis must provide written notice to the franchisee within 30 days following the expiration or termination of the agreement, specifying the categories of items they intend to purchase. The purchase price for these assets will be the fair market value, which Cicis and the franchisee will initially attempt to agree upon.
If both parties cannot agree on the fair market value, either party can demand an appraisal by providing written notice to the other party. This notice must include the name of a certified and independent appraiser selected by the party initiating the appraisal. The other party then has 10 days to respond with their own selected appraiser. If they fail to do so, the fair market value will be determined solely by the first party's chosen appraiser. This process ensures that the franchisee receives fair compensation for the assets Cicis acquires, while also providing Cicis with a mechanism to take over the location and continue operations if desired.