Are City Publications managerial employees required to have an ownership interest in a franchisee that is a business entity?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 25–26)
What This Means (2025 FDD)
Based on the 2025 City Publications Franchise Disclosure Document, there is no explicit requirement for managerial employees to have an ownership interest in a franchisee that is a business entity. The document outlines various restrictions and obligations for franchisees and their staff, but it does not specify mandatory ownership for managerial employees.
Item 23 details restrictions during and after the term of the agreement, preventing franchisees, their partners, officers, directors, members, executives, professional staff, or sales staff from engaging in competitive businesses or soliciting employees or customers. These restrictions aim to protect City Publications' interests and maintain the integrity of the franchise system. However, these clauses do not mention any requirement for managerial employees to hold ownership in the franchisee entity.
Item 1 clarifies that if the franchisee is a business entity, certain provisions of the Disclosure Document apply to the owners. This suggests that the focus is on the owners of the business entity rather than the managerial employees. The absence of a specific requirement for managerial employees to have ownership implies that City Publications does not mandate this condition.
Therefore, a prospective franchisee should confirm with City Publications whether there are any implicit expectations or unwritten policies regarding ownership for managerial employees. Understanding the franchisor's expectations regarding management structure and employee roles is crucial for a successful franchise operation.