Are the restrictive covenants for a City Publications franchise subject to audit or review?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
To the Members CITY PUBLICATIONS FRANCHISE GROUP, INC. Atlanta, Geogia
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying balance sheets of CITY PUBLICATIONS FRANCHISE GROUP, INC. as of December 31, 2024, and 2023 and the related statements of operations, shareholders' (deficit), and cash flows for the years ended December 31, 2024, and 2023, and the notes to financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CITY PUBLICATIONS FRANCHISE GROUP, INC. as of December 31, 2024, and 2023, and the results of their operations and their cash flows for the years ended December 31, 2024, and 2023, in accordance with accounting principles generally accepted in the United States of America.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
Based on the 2025 City Publications Franchise Disclosure Document, there is no mention of the restrictive covenants being subject to any audit or review. The document does include an Independent Auditor's Report on the financial statements of City Publications Franchise Group, Inc., indicating that the financial statements for 2024 and 2023 were audited. The audit was conducted in accordance with generally accepted auditing standards in the United States of America. The purpose of the audit is to provide an opinion on whether the financial statements present fairly the financial position, results of operations, and cash flows of City Publications Franchise Group, Inc.
The FDD also details the restrictive covenants within Section 17 of the franchise agreement, outlining restrictions during the term of the agreement and after termination. These covenants primarily focus on preventing franchisees from engaging in competitive businesses, soliciting employees, or diverting customers. City Publications requires franchisees to acknowledge that these restrictions are essential and reasonable for protecting the franchisor and the franchise system.
While the financial statements of City Publications are audited, the restrictive covenants themselves are not mentioned as being subject to a similar audit or review process. A prospective franchisee should seek clarification from City Publications regarding any internal review processes related to the enforcement and reasonableness of these restrictive covenants.