What consideration does a City Publications franchisee provide in exchange for the Exclusive Territory?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
the requirements for a controlled entity transfer (Section 20.C.) apply at signing.
SECTION 3. SCOPE OF LICENSE
A. Grant
In consideration of the royalties paid to Franchisor by Franchisee throughout the term hereof, Franchisor hereby grants to Franchisee, and Franchisee undertakes and accepts, upon the terms and conditions herein contained, the right, license and privilege to operate one (1) CITY PUBLICATIONS Business under the System and Marks. Subject to zoning and local ordinances, the Franchised Business may be operated or administered from any location. Franchisee is not required to obtain Franchisor's approval of any site, or to obtain a store front or commercial space, for the operation of the Franchised Business. If Franchisee establishes a commercial business location, any lease for the location must contain a provision entitling Franchisor, or its nominee, to assume such lease upon Franchisee's default of said lease.
B. Exclusive Territory
So long as this Agreement is in force and effect and Franchisee is not in default under any of the terms hereof, Franchisor will neither establish, nor license another to establish or operate, a CITY PUBLICATIONS Business within the geographic area identified in Exhibit A to this Agreement (the "Exclusive Territory"). The Exclusive Territory granted to Franchisee shall consist of approximately one hundred thousand (100,000) homes of an appropriate market value and shall be defined by zip codes. Demographics will be based upon the most recent available U.S. Census data at the time the Exclusive Territory is designated. Franchisee is required to confine its distribution of Card Packs to Franchisee's Exclusive Territory.
Franchisee may solicit for Card Pack advertisements outside of the Exclusive Territory so long as such advertisements are to be directed to consumers residing or situated within the Exclusive Territory. All activity to solicit advertising from individual business owners or other business entities having operations or sites in multiple franchise territories shall be reserved for Franchisor.
C. Franchisor's Rights
Except as otherwise provided, Franchisor retains all of its rights and discretion with respect to the Marks and the System, including the right:
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- To establish and operate, and license others to establish and operate, businesses under the System and Marks at any location outside of the Exclusive Territory as Franchisor deems appropriate;
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- To establish and operate, and license others to establish and operate, businesses under other systems using other proprietary marks both within and outside the Exclusive Territory as Franchisor deems appropriate; provided, however, that such other business will not be a loose card deck business similar to the Franchised Business if located within the Exclusive Territory.
Source: Item 12 — TERRITORY (FDD page 24)
What This Means (2025 FDD)
According to the 2025 City Publications Franchise Disclosure Document, a franchisee is granted an exclusive territory as long as the Franchise Agreement is in effect and the franchisee is not in default under any of its terms. In exchange for this exclusive territory, the franchisee must pay royalties to City Publications throughout the term of the agreement. The exclusive territory consists of approximately 100,000 homes of an appropriate market value, defined by zip codes, with demographics based on the most recent available U.S. Census data at the time the territory is designated. The franchisee is required to confine its distribution of Card Packs to this exclusive territory.
While franchisees must focus their distribution within their assigned territory, they are allowed to solicit Card Pack advertisements outside of it, provided these advertisements target consumers within their exclusive territory. However, City Publications retains the right to solicit advertising from individual business owners or entities with operations in multiple franchise territories. This condition ensures that City Publications maintains control over larger, multi-territory advertising deals, while franchisees focus on local advertising sales within their designated area.
Additionally, the success of the City Publications franchise system relies on each franchisee's best efforts within their exclusive territory. Franchisees must generate one 50,000 circulation card pack in the first mailing zone within the territory for the first nine months. Each consecutive year thereafter, the franchisee must generate at least four 50,000 circulation cards packs in each zone. Beginning in the fourth year, the franchisee must generate at least five 50,000 circulation cards packs in each zone. Failure to meet these mailing requirements results in a penalty of $2,500 per zone for each mailing missed, and failure to pay this amount can lead to termination of the Franchise Agreement. This performance requirement ensures that franchisees actively develop their territory and contribute to the overall success of the City Publications network.