After termination of a City Publications franchise, is a franchisee prohibited from acting as a consultant to a competitive business?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
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:
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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 within the Exclusive Territory granted to Franchisee, or within a radius of twenty-five (25) miles of any other Franchisor or franchisee-owned CITY PUBLICATIONS Business;
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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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- Solicit business from customers of Franchisee's former CITY PUBLICATIONS business or other Franchisor or franchisee-owned CITY PUBLICATIONS Businesses.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, a franchisee is restricted from acting as a consultant to a competitive business after the termination of the franchise agreement. Specifically, for a period of two years after the agreement's expiration or termination, the franchisee cannot, either directly or indirectly, act as a consultant to any Competitive Business within the Exclusive Territory granted to the franchisee. This restriction also extends to a 25-mile radius of any other City Publications or franchisee-owned City Publications business.
The term 'Competitive Business' is defined broadly in the FDD to include any business that sells direct mail advertising or similar services to those offered as part of the City Publications system. This definition also encompasses businesses where confidential information could be used to the disadvantage of City Publications or its other franchisees. However, it excludes businesses operated under a franchise agreement with City Publications or ownership of less than 5% of the stock of a publicly-traded corporation where similar services are ancillary and constitute less than 10% of the corporation's gross sales.
These post-termination restrictions are in place to protect City Publications' interests and the integrity of its franchise system. The FDD emphasizes that these restrictive covenants are essential elements of the agreement and are considered fair and reasonably required for the protection of City Publications and the Franchise System. Franchisees acknowledge the reasonableness of these terms when entering into the agreement.
Should a franchisee breach these covenants, City Publications is entitled to seek immediate equitable remedies, including restraining orders and injunctions, in addition to any other remedies available by law or equity. This underscores the importance City Publications places on enforcing these restrictions to prevent unfair competition and protect its business interests.