Under what circumstances is a business NOT considered a 'Competitive Business' for a City Publications franchisee?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
ould be used to the disadvantage of Franchisor or its other franchisees; provided, however, that the term "Competitive Business" shall not apply to: (a) any business operated by Franchisee under a Franchise Agreement with Franchisor, or (b) ownership for investment purposes of less than five percent (5%) of the stock of any publicly-traded corporation in which similar services as those offered as part of the System are sold only as an ancillary product, constituting less than ten percent (10%) of the aggregate gross sales of such business. Without limiting the foregoing, "Competitive Business" includes, among other things, magazines and any other print ads, internet advertising, email advertising, QR codes, and search engine optimization services;
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, a 'Competitive Business' generally includes any business selling direct mail advertising or similar services, or one that could use confidential City Publications information to the disadvantage of the franchisor or its franchisees. However, there are specific exceptions where a business is not considered a 'Competitive Business'.
Specifically, the term 'Competitive Business' does not apply if the business is operated by the franchisee under a franchise agreement with City Publications. This means a franchisee can operate multiple City Publications franchises without violating the competitive business restrictions. Additionally, ownership of less than five percent (5%) of the stock of any publicly-traded corporation is not considered a 'Competitive Business' if the corporation sells similar services as an ancillary product, constituting less than ten percent (10%) of the aggregate gross sales of such business.
In essence, these exceptions allow franchisees to operate other City Publications franchises and make minor investments in publicly-traded companies that offer similar services as a small part of their overall business without being considered a competitive threat. This provides some flexibility for franchisees while still protecting City Publications' core business and confidential information.