Does Cicis waiving any claims against the franchisee (or their owners) occur when Cicis consents to a transfer?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
Our consent to a Transfer is not a representation of the fairness of the terms of any contract between you and the transferee or transferee's prospects of success, or a waiver of any claims we have against you (or your owners) or of our right to demand full compliance by you and the transferee with this Agreement.
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- you (and your owner(s)) must sign a general release, in a form satisfactory to us, of any and all claims against us, our Affiliates, and our and their related parties;
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- you (and your transferring owner(s)) (and your or their immediate family members) must sign a non-competition covenant in favor of us, commencing on the effective date of the Transfer and consistent with the post-term non-competition obligations contained in the most recent Franchise Agreement that you or your Affiliates have signed with us;
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Cicis's consent to a transfer does not constitute a waiver of any claims Cicis has against the franchisee or their owners. Cicis also retains the right to demand full compliance with the Development Agreement by both the franchisee and the transferee, regardless of the consent to transfer. This means that even after a franchise is transferred, Cicis can still pursue any existing claims against the original franchisee or their owners.
Furthermore, if a franchisee seeks Cicis's approval for a transfer, Cicis may require the franchisee (and their owners) to sign a general release of any and all claims against Cicis and its affiliates. They may also require the franchisee (and their transferring owners) and their immediate family members to sign a non-competition covenant in favor of Cicis, which starts on the effective date of the transfer. These conditions are in addition to other requirements such as ensuring compliance with all obligations, providing necessary information and documents, and paying all outstanding amounts owed to Cicis and third-party vendors.
These provisions protect Cicis by ensuring that the transfer of a franchise does not release the original franchisee from any prior obligations or liabilities. It also allows Cicis to maintain control over potential future competition from the transferring franchisee. Prospective franchisees should be aware that even after transferring their franchise, they may still be subject to claims from Cicis and must adhere to non-competition agreements. This is a fairly standard practice in franchising, as franchisors want to ensure a clean break and protect their brand and system.