Does the restriction on diverting business apply to customers of the City Publications Franchised 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:
-
- 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;
-
- 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
-
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, franchisees are restricted from diverting business away from the City Publications franchise. During the term of the agreement, a franchisee cannot divert business from customers of their franchised business, or from other City Publications businesses owned by the franchisor or other franchisees, 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 also restricted from soliciting business from customers of their former City Publications business, or from other franchisor or franchisee-owned City Publications businesses. This post-termination restriction lasts for a period of two years. The restriction applies to the franchisee, their partners, officers, directors, members, executives, professional staff, sales staff, and their spouses.
These restrictions are in place to protect City Publications' customer relationships and prevent franchisees from unfairly competing with the franchise system, both during and after the franchise agreement. The FDD states that these restrictive covenants are essential elements of the agreement and that City Publications would not have entered into the agreement without them. Franchisees acknowledge that the terms, including the restrictive covenants, are fair, reasonable, and required for the protection of City Publications and the franchise system.