Does the City Publications franchise agreement prohibit diverting business of customers of the Franchised Business to any Competitive Business?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
agers and the spouses of each of the foregoing sign a like restrictive covenant which shall protect both Franchisor and Franchisee. Said covenants shall remain on file at the offices of Franchisee and are subject to audit or review as otherwise set forth herein.
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:
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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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Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, the franchise agreement does address the diversion of business to competitive entities. During the term of the agreement, a franchisee is prohibited from diverting business from customers of the franchised City Publications business, or other franchisor or franchisee-owned City Publications businesses, to any Competitive Business. This restriction applies to the franchisee, their partners, officers, directors, members, executives, professional staff, sales staff, and their spouses.
After the termination of the franchise agreement, the franchisee is restricted from soliciting business from customers of their former City Publications business or other franchisor or franchisee-owned City Publications businesses for a period of two years. This post-termination restriction also applies to the franchisee, their partners, officers, directors, members, executives, professional staff, sales staff, and their spouses.
The City Publications franchise agreement 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 the franchisor or its other franchisees. However, this definition excludes businesses operated under a franchise agreement with the franchisor and ownership of less than 5% of the stock of any publicly-traded corporation where similar services are ancillary and constitute less than 10% of the business's gross sales. Competitive Businesses include magazines and any other print ads, internet advertising, email advertising, QR codes, and search engine optimization services.