What constitutes a material violation of the Franchise Agreement that could lead to termination of a City Publications franchise?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Restriction During Term of Agreement
Franchisee covenants that, except as otherwise approved in writing by Franchisor, neither Franchisee nor any partner(s), officer(s), director(s), member(s), executives, professional staff or sales staff or the spouses of any of the foregoing shall, during the term hereof, either directly or indirectly, for itself or through, on behalf of or in conjunction with, any person, persons, partnership, corporation, limited liability company or other entity:
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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;
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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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- Divert business of customers of the Franchised Business or other Franchisor or franchisee-owned CITY PUBLICATIONS Businesses to any Competitive Business.
B. Restriction After Termination
Franchisee covenants that, except as otherwise approved in writing by Franchisor, neither Franchisee nor any partner(s), officer(s), director(s), member(s), executives, or professional staff or sales staff or their spouses of any of the foregoing shall for a period of two (2) years after the expiration or termination of this Agreement regardless of the cause, either directly or indirectly, for itself or through, on behalf of or in conjunction with, any person, persons, partnership, corporation, limited liability company or other entity:
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
Based on the 2025 City Publications Franchise Disclosure Document, franchisees are restricted from certain activities during the term of the agreement. Specifically, unless approved in writing by the franchisor, the franchisee (or their partners, officers, directors, members, executives, professional staff, sales staff, or their spouses) cannot own an interest in, manage, operate, or be employed by any Competitive Business. They are also prohibited from attempting to hire employees of City Publications or other City Publications franchisees, or diverting business from the Franchised Business or other City Publications businesses to a Competitive Business.
After the termination or expiration of the Franchise Agreement, these restrictions continue for a period of two years. During this time, the franchisee and related parties are still prohibited from engaging in the aforementioned competitive activities, regardless of the cause of termination.
These restrictions are designed to protect City Publications's business interests and prevent franchisees from using the franchisor's confidential information or business model to compete against them, both during and for a limited time after the franchise agreement is in effect. A prospective franchisee should carefully consider these restrictions and ensure they do not conflict with any existing or planned business activities. Violating these restrictions could lead to termination of the franchise agreement and potential legal action.