Does Section 19.0 of the City Publications agreement approve a franchisee's right to operate other businesses?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
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:
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to the 2025 City Publications Franchise Disclosure Document, Section 17, which includes restrictive covenants, addresses the franchisee's ability to engage in other business activities. Specifically, during the term of the agreement, franchisees are restricted from owning an interest in, managing, operating, or being employed by any Competitive Business, unless otherwise approved in writing by City Publications. This restriction applies to the franchisee, their partners, officers, directors, members, executives, professional staff, sales staff, and their spouses.
After the termination or expiration of the agreement, these restrictions continue for a period of two years. During this time, the franchisee and related parties are still prohibited from engaging in a Competitive Business without written approval from City Publications. A Competitive Business is defined as any 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 City Publications or its other franchisees.
These restrictions are acknowledged by the franchisee as essential elements of the agreement, and the franchisee agrees that they are fair, reasonable, and necessary to protect City Publications and the franchise system. Any breach of these covenants could result in irreparable injury to City Publications, entitling them to seek equitable remedies such as restraining orders and injunctions, in addition to other legal remedies.