What is the condition regarding the transferee's other business activities that might detract from the commitment to the City Publications franchised business?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Own an interest in, manage, operate, be employed, in a sales or management capacity, by, or act as a consultant to any Competitive Business anywhere within the Exclusive Territory granted to Franchisee, or within a radius of twenty-five (25) miles of any other Franchisor or franchisee-owned CITY PUBLICATIONS Business;
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- Initiate any action to hire, or attempt to hire for any other employer, any person who is employed by Franchisor or employed by any other franchisee of the CITY PUBLICATIONS System, or induce any such person to leave his employment with Franchisor or any other franchisee in order to work for any other employer, whether or not the person's employment with the business is pursuant to a written agreement or is at will; or
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- Solicit business from customers of Franchisee's former CITY PUBLICATIONS business or other Franchisor or franchisee-owned CITY PUBLICATIONS Businesses.
C. Reasonableness of Restrictions
Franchisee acknowledges that the restrictive covenants contained in Section 17 are essential elements of this Agreement
and that without their inclusion, Franchisor would not have entered into this Agreement. Franchisee agrees that each of the terms set forth herein, including the restrictive covenants, is fair and reasonable, and are reasonably required for the protection of Franchisor and the Franchise System.
D. Remedies
As any breach by Franchisee of any of the covenants contained in this Section would result in irreparable injury to Franchisor, and as the damages arising out of any such breach would be difficult to ascertain, Franchisee agrees that, in addition to all other remedies provided by law or in equity, Franchisor, in the event of a breach or threatened breach of the covenants herein contained, shall be entitled to seek immediate equitable remedies including, but not limited to, restraining orders, preliminary and permanent injunctions in order to prevent Franchisee, its partners, members, officers, directors or employees from continuing to breach the covenants contained in this Section 17.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, a franchisee is restricted from engaging in activities that compete with the City Publications business. Specifically, a franchisee cannot own an interest in, manage, operate, be employed in a sales or management capacity by, or act as a consultant to any Competitive Business within their Exclusive Territory or within 25 miles of any other City Publications franchise.
The FDD defines a "Competitive Business" as any business that sells, or grants franchises or licenses to others to operate a business that sells, direct mail advertising or similar services to those offered as part of the City Publications System, or in which Confidential Information could be used to the disadvantage of Franchisor or its other franchisees. However, this does not apply to businesses operated under a franchise agreement with City Publications or ownership for investment purposes of less than 5% of the stock of any publicly-traded corporation in which similar services are sold only as an ancillary product, constituting less than 10% of the aggregate gross sales of such business.
This restriction is in place to protect City Publications' market share, confidential information, and franchisee network. The agreement emphasizes that these restrictive covenants are essential and that City Publications would not have entered into the agreement without them. Franchisees acknowledge that these terms are fair, reasonable, and necessary for the protection of City Publications and the franchise system.
If a franchisee breaches these covenants, City Publications is entitled to seek immediate equitable remedies, including restraining orders, preliminary and permanent injunctions, in addition to all other remedies provided by law or equity. This highlights the seriousness with which City Publications views these restrictions and the potential legal ramifications for franchisees who violate them.