Why does City Publications require protection against its costs in training the franchisee and its staff?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges that the restrictive covenants contained in Section 17 are essential elements of this Agreement
and that without their inclusion, Franchisor would not have entered into this Agreement. Franchisee agrees that each of the terms set forth herein, including the restrictive covenants, is fair and reasonable, and are reasonably required for the protection of Franchisor and the Franchise System.
As any breach by Franchisee of any of the covenants contained in this Section would result in irreparable injury to Franchisor, and as the damages arising out of any such breach would be difficult to ascertain, Franchisee agrees that, in addition to all other remedies provided by law or in equity, Franchisor, in the event of a breach or threatened breach of the covenants herein contained, shall be entitled to seek immediate equitable remedies including, but not limited to, restraining orders, preliminary and permanent injunctions in order to prevent Franchisee, its partners, members, officers, directors or employees from continuing to breach the covenants contained in this Section 17.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to the 2025 FDD, City Publications includes restrictive covenants in its franchise agreement to protect the company. These covenants are acknowledged by the franchisee as essential to the agreement, ensuring that City Publications would not have entered into the agreement without them. The franchisee agrees that these terms, including the restrictive covenants, are fair, reasonable, and necessary to protect City Publications and the franchise system. These measures are in place to safeguard City Publications' investment in training and support provided to franchisees and their staff.
Specifically, the agreement outlines restrictions during the term of the agreement and after termination. During the term, franchisees (and related parties such as partners, officers, directors, and staff) are prohibited from owning an interest in, managing, operating, or being employed by any competitive business. They are also barred from hiring or attempting to hire employees of City Publications or other franchisees, or from diverting business from City Publications to a competitive business. After termination of the agreement, these restrictions continue for a period of two years, regardless of the reason for termination.
City Publications emphasizes the importance of these restrictions by stating that any breach would result in irreparable injury to the company, and the resulting damages would be difficult to ascertain. Therefore, in the event of a breach or threatened breach, City Publications is entitled to seek immediate equitable remedies, including restraining orders and injunctions, to prevent the franchisee from violating these covenants. This underscores the franchisor's need to protect its business model, customer relationships, and proprietary information, all of which are supported by the training and resources provided to franchisees.