What are the stated reasons for the restrictive covenant in the City Publications franchise agreement?
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 City Publications' 2025 Franchise Disclosure Document, the restrictive covenants in Section 17 of the franchise agreement are considered essential. City Publications states that it would not enter into the agreement without these covenants.
The agreement emphasizes that each term, including the restrictive covenants, is deemed fair, reasonable, and necessary to protect City Publications and its franchise system. This suggests that City Publications places a high value on preventing franchisees from engaging in activities that could harm the brand or unfairly compete with other franchisees or the franchisor itself.
Furthermore, the FDD states that any breach of these covenants by a franchisee would cause irreparable injury to City Publications. It acknowledges that calculating the exact damages from such a breach would be difficult. Therefore, City Publications is entitled to seek immediate equitable remedies, including restraining orders and injunctions, to prevent franchisees from violating the restrictive covenants. This highlights the franchisor's commitment to enforcing these covenants and protecting its interests and the interests of its franchisees.