What is considered a 'Competitive Business' that a City Publications franchisee is restricted from operating?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
- "Competitive Business" means 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; provided, however, that the term "Competitive Business" shall not apply to: (a) any business operated by Franchisee under a Franchise Agreement with Franchisor, or (b) ownership for investment purposes of less than five percent (5%) of the stock of any publicly-traded corporation in which similar services as those offered as part of the System are sold only as an ancillary product, constituting less than ten percent (10%) of the aggregate gross sales of such business. Without limiting the foregoing, "Competitive Business" includes, among other things, magazines and any other print ads, internet advertising, email advertising, QR codes, and search engine optimization services;
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, a 'Competitive Business' is defined 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. This also includes businesses in which confidential information could be used to the disadvantage of City Publications or its other franchisees.
This definition extends to various forms of advertising, including magazines and other print ads, internet advertising, email advertising, QR codes, and search engine optimization services. However, there are exceptions. The term 'Competitive Business' does not apply to any business operated by a franchisee under a Franchise Agreement with City Publications. It also excludes ownership for investment purposes of less than 5% of the stock of any publicly-traded corporation where similar services are sold only as an ancillary product, constituting less than 10% of the aggregate gross sales of such business.
For a prospective franchisee, this definition is crucial because it outlines the scope of activities they are restricted from engaging in, both during the term of the franchise agreement and for a specified period after termination. Understanding these restrictions is essential for avoiding potential conflicts of interest and ensuring compliance with the franchise agreement. It is also important to note the exceptions, particularly regarding investment in publicly-traded companies, as this provides some flexibility for franchisees to diversify their investments without violating the agreement.