City_Wide 2025 Franchise FAQ - FDD Ninja

Question 1

For the 23 City Wide locations included in the 2024 financial performance representation, how many locations met or exceeded the average annual revenue of $22,736,949, and what percentage does that represent?

Accepted Answer

|  | Annual Revenue |
|---|---|
| High | $51,628,184 |
| Low | $11,799,482 |
| Median | $19,912,140 |
| Average (met or exceeded by 8 locations, | $22,736,949 |
| or 35%) |  |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 48–58)

Question 2

What is the average 2024 Gross Sales figure for City Wide franchisees who satisfied the Average 2024 Gross Sales Reporting Criteria?

Accepted Answer

|  | 2023 Gross Sales | 2024 Gross Sales |
|---|---|---|
| High | $33,406,500 | $51,628,184 |
| Low | $373,591 | $461,984 |
| Median | $4,963,714 | $4,798,193 |
| Average | $7,839,821 | $8,938,134 |

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 48–58)

Question 3

What was the average annual revenue for City Wide franchise locations that met or exceeded the average, and what percentage of locations did this represent?

Accepted Answer

or 22 Locations**

|  | Annual Revenue |
|---|---|
| High | $33,406,500 |
| Low | $9,920,964 |
| Median | $15,773,158 |
| Average (met or exceeded by 7 locations, | $18,853,194 |
| or 32%)

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 48–58)

Question 4

What was the depreciation expense for City Wide before eliminating entries in 2024?

Accepted Answer

| -          |                                 | -                    | -                                             |     | 39,507  | 39,507        |
| Distributions              |                              |       |      |            |                                 |                      | (16,582,517)                                  |     |         | (16,582,517)  |
| Balance December 31, 2024  | \$                           | 2,100 | \$   | 210,000    | \$                              | 366,366              | \$ 13,031,512                                 | \$  | 54,347  | \$ 13,664,325 |

#### **City Wide Franchise Company, Inc. & Subsidiaries Consolidated Statements of Cash Flows Years Ended December 31, 2024, 2023, and 2022**

|                                                                                                                                                                              | 2024                   | 2023                          | 2022                 |
|-------------------------------------------------------------------------------------------

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 65)

Question 5

What was the range of total initial fees collected by City Wide in its most recent fiscal year, and what caused the variance?

Accepted Answer

tablishment of the CITY WIDE proprietary operating software systems.

CITY WIDE refers to the Initial Franchise Fee, Initial Training Fee, Initial Territory Fee and the Technology Provisioning Fee collectively as "**Initial Fees**." In CITY WIDE's most recent fiscal year, the range of Initial Fees CITY WIDE collected was from \$105,000 to

Source: Item 5 — INITIAL FEES (FDD pages 15–16)

Question 6

What were the total advertising and marketing expenses for City Wide before eliminating entries in 2024?

Accepted Answer

| 10,452,951       | 17,969,298       |
| Total stockholders' equity                            | 13,664,325       | 11,046,257       | 18,569,257       |
| Total liabilities and stockholders' equity            | \$ 39,487,375 | \$ 33,801,707 | \$ 35,090,119 |

#### **City Wide Franchise Company, Inc. & Subsidiaries Consolidated Statements of Income and Comprehensive Income Years Ended December 31, 2024, 2023, and 2022**

|                                              | 2024             | 2023             | 2022             |
|----------------------------------------------|------------------|------------------|------------------|
| Revenues                                     |                  |                  |                  |
| Royalties                                    | \$ 29,465,788 | \$ 24,303,311 | \$ 20,595,555 |
| Franchise fees                               | 545,350          | 825,418          | 620,722          |
| Other franchise goods and services           | 14,130,864       | 11,947,867       | 8,773,822        |
| Total revenues                               | 44,142,002       | 37,076,596       | 29,990,099       |
| Expenses                                     |                  |                  |                  |
| Advertising and marketing                    | 1,111,167        | 986,941          | 754,532          |
| Cost of service and supplies                 | 3,445,053        | 3,578,645        | 2,378,710        |
| Depreciation                                 | 999,912          | 1,063,068        | 1,095,919        |
| Dues and subscriptions                       | 308,813          | 281,306          | 261,741          |
| Facilities                                   | 330,973          | 313,881          | 302,197          |
| Franchise meetings and awards                | 1,035,761        | 677,098          | 607,632          |
| Miscellaneous                                | 1,049,080        | 502,862          | 326,209          |
| Office supplies                              | 40,824           | 46,077           | 50,386           |
| Professional fees and services               | 1,665,759        | 1,674,776        | 1,695,367        |
| Salaries and benefits                        | 13,682,507       | 11,875,148       | 10,021,695       |
| Taxes and licenses                           | 123,714          | 110,935          | 89,265           |
| Training                                     | 16,411           | 13,436           | 20,588           |
| Travel and meals                             | 425,749          | 422,308          | 436,364          |
| Loss on abandonment of software subscription | 1,454,554        | -                | -                |
| Total expenses                               | 25,690,277       | 21,546,481       | 18,040,605       |
| Operating Income                             | 18,451,725       | 15,530,115       | 11,949,494       |
| Other Income (Expense)                       |                  |                  |                  |
| Management fee                               | (900,000)        | (2,507,195)      | (1,380,004)      |
| Interest income                              | 751,239          | 767,173          | 195,476          |

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 65)

Question 7

What were the total consolidated advertising and marketing expenses for City Wide in 2024?

Accepted Answer

| 10,452,951       | 17,969,298       |
| Total stockholders' equity                            | 13,664,325       | 11,046,257       | 18,569,257       |
| Total liabilities and stockholders' equity            | \$ 39,487,375 | \$ 33,801,707 | \$ 35,090,119 |

#### **City Wide Franchise Company, Inc. & Subsidiaries Consolidated Statements of Income and Comprehensive Income Years Ended December 31, 2024, 2023, and 2022**

|                                              | 2024             | 2023             | 2022             |
|----------------------------------------------|------------------|------------------|------------------|
| Revenues                                     |                  |                  |                  |
| Royalties                                    | \$ 29,465,788 | \$ 24,303,311 | \$ 20,595,555 |
| Franchise fees                               | 545,350          | 825,418          | 620,722          |
| Other franchise goods and services           | 14,130,864       | 11,947,867       | 8,773,822        |
| Total revenues                               | 44,142,002       | 37,076,596       | 29,990,099       |
| Expenses                                     |                  |                  |                  |
| Advertising and marketing                    | 1,111,167        | 986,941          | 754,532          |
| Cost of service and supplies                 | 3,445,053        | 3,578,645        | 2,378,710        |
| Depreciation                                 | 999,912          | 1,063,068        | 1,095,919        |
| Dues and subscriptions                       | 308,813          | 281,306          | 261,741          |
| Facilities                                   | 330,973          | 313,881          | 302,197          |
| Franchise meetings and awards                | 1,035,761        | 677,098          | 607,632          |
| Miscellaneous                                | 1,049,080        | 502,862          | 326,209          |
| Office supplies                              | 40,824           | 46,077           | 50,386           |
| Professional fees and services               | 1,665,759        | 1,674,776        | 1,695,367        |
| Salaries and benefits                        | 13,682,507       | 11,875,148       | 10,021,695       |
| Taxes and licenses                           | 123,714          | 110,935          | 89,265           |
| Training                                     | 16,411           | 13,436           | 20,588           |
| Travel and meals                             | 425,749          | 422,308          | 436,364          |
| Loss on abandonment of software subscription | 1,454,554        | -                | -                |
| Total expenses                               | 25,690,277       | 21,546,481       | 18,040,605       |
| Operating Income                             | 18,451,725       | 15,530,115       | 11,949,494       |
| Other Income (Expense)                       |                  |                  |                  |
| Management fee                               | (900,000)        | (2,507,195)      | (1,380,004)      |
| Interest income                              | 751,239          | 767,173          | 195,476          |

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 65)

Question 8

What were the total consolidated costs of services, supplies, and equipment for City Wide in 2024?

Accepted Answer

| 10,452,951       | 17,969,298       |
| Total stockholders' equity                            | 13,664,325       | 11,046,257       | 18,569,257       |
| Total liabilities and stockholders' equity            | \$ 39,487,375 | \$ 33,801,707 | \$ 35,090,119 |

#### **City Wide Franchise Company, Inc. & Subsidiaries Consolidated Statements of Income and Comprehensive Income Years Ended December 31, 2024, 2023, and 2022**

|                                              | 2024             | 2023             | 2022             |
|----------------------------------------------|------------------|------------------|------------------|
| Revenues                                     |                  |                  |                  |
| Royalties                                    | \$ 29,465,788 | \$ 24,303,311 | \$ 20,595,555 |
| Franchise fees                               | 545,350          | 825,418          | 620,722          |
| Other franchise goods and services           | 14,130,864       | 11,947,867       | 8,773,822        |
| Total revenues                               | 44,142,002       | 37,076,596       | 29,990,099       |
| Expenses                                     |                  |                  |                  |
| Advertising and marketing                    | 1,111,167        | 986,941          | 754,532          |
| Cost of service and supplies                 | 3,445,053        | 3,578,645        | 2,378,710        |
| Depreciation                                 | 999,912          | 1,063,068        | 1,095,919        |
| Dues and subscriptions                       | 308,813          | 281,306          | 261,741          |
| Facilities                                   | 330,973          | 313,881          | 302,197          |
| Franchise meetings and awards                | 1,035,761        | 677,098          | 607,632          |
| Miscellaneous                                | 1,049,080        | 502,862          | 326,209          |
| Office supplies                              | 40,824           | 46,077           | 50,386           |
| Professional fees and services               | 1,665,759        | 1,674,776        | 1,695,367        |
| Salaries and benefits                        | 13,682,507       | 11,875,148       | 10,021,695       |
| Taxes and licenses                           | 123,714          | 110,935          | 89,265           |
| Training                                     | 16,411           | 13,436           | 20,588           |
| Travel and meals                             | 425,749          | 422,308          | 436,364          |
| Loss on abandonment of software subscription | 1,454,554        | -                | -                |
| Total expenses                               | 25,690,277       | 21,546,481       | 18,040,605       |
| Operating Income                             | 18,451,725       | 15,530,115       | 11,949,494       |
| Other Income (Expense)                       |                  |                  |                  |
| Management fee                               | (900,000)        | (2,507,195)      | (1,380,004)      |
| Interest income                              | 751,239          | 767,173          | 195,476          |

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 65)

Question 9

What were the total costs of services, supplies, and equipment for City Wide before eliminating entries in 2024?

Accepted Answer

| 10,452,951       | 17,969,298       |
| Total stockholders' equity                            | 13,664,325       | 11,046,257       | 18,569,257       |
| Total liabilities and stockholders' equity            | \$ 39,487,375 | \$ 33,801,707 | \$ 35,090,119 |

#### **City Wide Franchise Company, Inc. & Subsidiaries Consolidated Statements of Income and Comprehensive Income Years Ended December 31, 2024, 2023, and 2022**

|                                              | 2024             | 2023             | 2022             |
|----------------------------------------------|------------------|------------------|------------------|
| Revenues                                     |                  |                  |                  |
| Royalties                                    | \$ 29,465,788 | \$ 24,303,311 | \$ 20,595,555 |
| Franchise fees                               | 545,350          | 825,418          | 620,722          |
| Other franchise goods and services           | 14,130,864       | 11,947,867       | 8,773,822        |
| Total revenues                               | 44,142,002       | 37,076,596       | 29,990,099       |
| Expenses                                     |                  |                  |                  |
| Advertising and marketing                    | 1,111,167        | 986,941          | 754,532          |
| Cost of service and supplies                 | 3,445,053        | 3,578,645        | 2,378,710        |
| Depreciation                                 | 999,912          | 1,063,068        | 1,095,919        |
| Dues and subscriptions                       | 308,813          | 281,306          | 261,741          |
| Facilities                                   | 330,973          | 313,881          | 302,197          |
| Franchise meetings and awards                | 1,035,761        | 677,098          | 607,632          |
| Miscellaneous                                | 1,049,080        | 502,862          | 326,209          |
| Office supplies                              | 40,824           | 46,077           | 50,386           |
| Professional fees and services               | 1,665,759        | 1,674,776        | 1,695,367        |
| Salaries and benefits                        | 13,682,507       | 11,875,148       | 10,021,695       |
| Taxes and licenses                           | 123,714          | 110,935          | 89,265           |
| Training                                     | 16,411           | 13,436           | 20,588           |
| Travel and meals                             | 425,749          | 422,308          | 436,364          |
| Loss on abandonment of software subscription | 1,454,554        | -                | -                |
| Total expenses                               | 25,690,277       | 21,546,481       | 18,040,605       |
| Operating Income                             | 18,451,725       | 15,530,115       | 11,949,494       |
| Other Income (Expense)                       |                  |                  |                  |
| Management fee                               | (900,000)        | (2,507,195)      | (1,380,004)      |
| Interest income                              | 751,239          | 767,173          | 195,476          |

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 65)

Question 10

What is the total estimated initial investment range for a City Wide franchise?

Accepted Answer

| Type of Expenditure1 | Amount | payment | When Due | is to be Made |
|---|---|---|---|---|
| Initial Franchise Fee2 | $70,000 | Lump Sum | At Signing of Franchise Agreement | CITY WIDE |
| Initial Training Fee | $7,500 | Lump Sum | At Signing of Franchise Agreement | CITY WIDE |
| Initial Territory Fee3 | $15,000 to $50,000 | Lump Sum | At Signing of Franchise Agreement | CITY WIDE |
| Technology Provisioning | $12,500 | Lump Sum | At Signing of | CITY WIDE |
| Fee4 |  |  | Franchise Agreement |  |
| Travel and Living Expenses While Training5 | $4,000 to $10,000 | As Incurred | During Training/ Before Opening | Airlines, hotels, Restaurants, Car Rental Companies, and other vendors |
| Real Estate / Rent Deposit6 | $6,000 to $12,000 | As Arranged | Before Opening | Your Landlord |
| Leasehold Improvements7 | $0 to $5,000 | As Arranged | Before Opening | Landlord, Contractors, and Vendors |
| Signage8 | $700 to $2,500 | As Arranged | Before Opening | Approved Suppliers and Vendors |
| Utility and Security | $0 to $3,000 | As Arranged | Before Opening | Landlord and Utility |
| Deposits9 |  |  |  | Companies |
| Furniture, Fixtures, and | $5,000 to $16,000 | As Arranged | Before Opening | Approved Suppliers |
| Equipment10 |  |  |  | and Vendors |
| Computer Hardware, | $7,000 to $10,500 | As Arranged | Before Opening | CITY WIDE |
| Software, Peripherals and |  |  |  |  |
| Licensing Fees11 |  |  |  |  |
| IT Support Services12 | $120 per user per month for the first thirty-six months of operations for ongoing IT desktop services and support. | As Arranged, Monthly | Before Opening | CITY WIDE |
| Accounting Services13 | $1,500 | Monthly | Upon Opening | CITY WIDE |
| Business Development | $3,500 | Monthly | Upon Opening | CITY WIDE |
| Services14 |  |  |  |  |
| Technology Development | $1,864 | Monthly | Upon Opening | CITY WIDE |
| Fee and IT Project |  |  |  |  |
| Development Fees15 |  |  |  |  |
| IT Project Development | $300 | Monthly | Upon Opening | CITY WIDE |
| Fees 15 |  |  |  |  |
| Office Supplies and | $1,400 to $2,100 | Monthly | Upon Opening | CITY WIDE |
| Stationery16 |  |  |  |  |
|  | Amount | Method of | When Due | To Whom Payment |
| Type of Expenditure1 |  | payment |  | is to be Made |
| Recruitment Advertising | $4,500 to $13,500 | As Arranged | As Arranged | CITY WIDE and |
| and Services17 |  |  |  | Various Providers |
| Insurance18 | $1,900 to $5,700 | Installment/As Arranged | Monthly/As Arranged, A Portion Before Opening | Insurance Company |
| Payroll Technology19 | $1,000 to $3,500 | As Arranged | As Incurred | Required Suppliers |
| Professional Fees and License Fees20 | $8,000 to $12,000 | As Arranged | As Incurred | Approved Suppliers, Governmental Agencies, Accountants, Attorneys |
| Additional Funds21 | $75,000 to $150,000 | As Incurred | As Incurred | Various Providers, Suppliers and Employees |
| TOTAL22 | $226,784 to 393,084 |  |  |  |

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 21–24)

Question 11

What is the total number of classroom training hours provided by City Wide?

Accepted Answer

| Subject                       | Hours of Classroom Training1 | Hours of On the-Job Training2 | Location                                    |
|-------------------------------|------------------------------------|-------------------------------------|---------------------------------------------|
| Owner/GM Guide | 8 | 0 | Kansas City Metropolitan Area or virtual |
| Contract Sales & | 48 | 0 | Kansas City Metropolitan Area |
| Bidding |  |  | or virtual |
| Operations Quality | 8 | 0 | Kansas City Metropolitan Area |
| Control |  |  | or virtual |
| Cleaning | 8 | 0 | Kansas City Metropolitan Area or virtual |
| Office Administration | 4 | 0 | Kansas City Metropolitan Area or virtual |
| Accounting and | 4 | 0 | Kansas City Metropolitan Area |
| Financial |  |  | or virtual |
| Getting Started | 4 | 0 | Kansas City Metropolitan Area or virtual |
| Computers | 2 | 0 | Kansas City Metropolitan Area or virtual |
| Review & Quiz | 2 | 0 | Kansas City Metropolitan Area or virtual |
| Total | 88 | 0 |  |

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 29–36)

Question 12

What was the total number of City Wide franchise transfers across all states in 2024?

Accepted Answer

| State | Year | Number of Transfers |
|---|---|---|
| California | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 1 |
| Connecticut | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| New Jersey | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| Illinois | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| New York | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Pennsylvania | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| Florida | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| TOTAL | 2022 | 0 |
|  | 2023 | 3 |
|  | 2024 | 5 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–65)

Question 13

What was the total number of City Wide outlets at the end of 2023?

Accepted Answer

| Outlet Type   | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---------------|------|----------------------------------------|--------------------------------------|------------|
|               | 2022 | 68                                     | 85                                   | +17        |
| Franchised    | 2023 | 85                                     | 94                                   | +9         |
|               | 2024 | 94                                     | 98                                   | +4         |
|               | 2022 | 0                                      | 0                                    | 0          |
| Company-Owned | 2023 | 0                                      | 0                                    | 0          |
|               | 2024 | 0                                      | 0                                    | 0          |
|               | 2022 | 68                                     | 85                                   | +17        |
| Total Outlets | 2023 | 85                                     | 94                                   | +9         |
|               | 2024 | 94                                     | 98                                   | +4         |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–65)

Question 14

According to the City Wide FDD, which states have an effective franchise registration?

Accepted Answer

The following list reflects the status of the franchise registrations of the Franchisor in the states which require registration:

- 1. This proposed registration is effective in the following states:
  - California, Hawaii, Illinois, Maryland, Michigan, New York, Virginia, and Wisconsin
- 2. This proposed registration is or will shortly be on file in the following states:

None

3. States which have refused, by order or otherwise, to register these franchises are:

None

4. States which have revoked or suspended the right to offer the franchises are:

None

5. States in which the proposed registration of these franchises has been withdrawn are:

None

Source: Item 22 — CONTRACTS (FDD page 65)

Question 15

As of December 31, 2023, was the City Wide Facility Solutions of Chicago outlet transferred to a new owner, or was it purchased by the franchisor?

Accepted Answer

Question 16

By December 31, 2023, how many City Wide franchisees met the 2023 Quartile Reporting Criteria?

Accepted Answer

- (2) As of December 31, 2023, CITY WIDE had 98 CITY WIDE franchisees operating in the CITY WIDE System. Of the total number of CITY WIDE franchisees operating, 85 CITY WIDE franchisees met all of the following criteria ("**2023 Quartile Reporting Criteria**"): each CITY WIDE franchise was operated under a standard Franchise Agreement, had been open and operating for at least one full 12-month period by December 31, 2023 ("**2023 Quartile Reporting Period**"), had submitted required Royalty Fee reports, and had operated continuously during the period between January 1, 2023, and December 31, 2023. In addition, during the 2023 Quartile Reporting Period, CITY WIDE had 69 CITY WIDE franchisees that had been operating at least 24 full months, 66 CITY WIDE franchisees that had been operating at least 36 full months, 60 CITY WIDE franchisees that had been operating at least 48 months, and 55 CITY WIDE franchises that had been operating at least 60 months. The results of the remaining CITY WIDE franchisee did not satisfy one or more of the Quartile Reporting Criteria. All CITY WIDE franchisees that satisfied the Quartile Reporting Criteria are included in this table.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 48–58)

Question 17

What was the impairment loss recognized by City Wide for the year ended December 31, 2024, and were there any impairment losses recognized in the preceding two years?

Accepted Answer

sset.

The estimated useful lives for each major depreciable classification of property and equipment are as follows:

Leasehold improvements Shorter of lease term or useful life Automobiles 5 years Office furniture and equipment 3 to 5 years Computer equipment 5 years Computer software 3 to 10 years Telephone equipment 5 years

#### *Software Subscription*

During 2023, the Company entered into a multi-year software subscription which is accounted for as a cloud computing arrangement. During 2024, the Company abandoned this arrangement and incurred a loss of \$1,454,554.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 65)

Question 18

How does the Initial Franchise Fee for City Wide in Item 5 relate to the estimated initial investment range in Item 7?

Accepted Answer

| Type of Expenditure1 | Amount | payment | When Due | is to be Made |
|---|---|---|---|---|
| Initial Franchise Fee2 | $70,000 | Lump Sum | At Signing of Franchise Agreement | CITY WIDE |
| Initial Training Fee | $7,500 | Lump Sum | At Signing of Franchise Agreement | CITY WIDE |
| Initial Territory Fee3 | $15,000 to $50,000 | Lump Sum | At Signing of Franchise Agreement | CITY WIDE |
| Technology Provisioning | $12,500 | Lump Sum | At Signing of | CITY WIDE |
| Fee4 |  |  | Franchise Agreement |  |
| Travel and Living Expenses While Training5 | $4,000 to $10,000 | As Incurred | During Training/ Before Opening | Airlines, hotels, Restaurants, Car Rental Companies, and other vendors |
| Real Estate / Rent Deposit6 | $6,000 to $12,000 | As Arranged | Before Opening | Your Landlord |
| Leasehold Improvements7 | $0 to $5,000 | As Arranged | Before Opening | Landlord, Contractors, and Vendors |
| Signage8 | $700 to $2,500 | As Arranged | Before Opening | Approved Suppliers and Vendors |
| Utility and Security | $0 to $3,000 | As Arranged | Before Opening | Landlord and Utility |
| Deposits9 |  |  |  | Companies |
| Furniture, Fixtures, and | $5,000 to $16,000 | As Arranged | Before Opening | Approved Suppliers |
| Equipment10 |  |  |  | and Vendors |
| Computer Hardware, | $7,000 to $10,500 | As Arranged | Before Opening | CITY WIDE |
| Software, Peripherals and |  |  |  |  |
| Licensing Fees11 |  |  |  |  |
| IT Support Services12 | $120 per user per month for the first thirty-six months of operations for ongoing IT desktop services and support. | As Arranged, Monthly | Before Opening | CITY WIDE |
| Accounting Services13 | $1,500 | Monthly | Upon Opening | CITY WIDE |
| Business Development | $3,500 | Monthly | Upon Opening | CITY WIDE |
| Services14 |  |  |  |  |
| Technology Development | $1,864 | Monthly | Upon Opening | CITY WIDE |
| Fee and IT Project |  |  |  |  |
| Development Fees15 |  |  |  |  |
| IT Project Development | $300 | Monthly | Upon Opening | CITY WIDE |
| Fees 15 |  |  |  |  |
| Office Supplies and | $1,400 to $2,100 | Monthly | Upon Opening | CITY WIDE |
| Stationery16 |  |  |  |  |
|  | Amount | Method of | When Due | To Whom Payment |
| Type of Expenditure1 |  | payment |  | is to be Made |
| Recruitment Advertising | $4,500 to $13,500 | As Arranged | As Arranged | CITY WIDE and |
| and Services17 |  |  |  | Various Providers |
| Insurance18 | $1,900 to $5,700 | Installment/As Arranged | Monthly/As Arranged, A Portion Before Opening | Insurance Company |
| Payroll Technology19 | $1,000 to $3,500 | As Arranged | As Incurred | Required Suppliers |
| Professional Fees and License Fees20 | $8,000 to $12,000 | As Arranged | As Incurred | Approved Suppliers, Governmental Agencies, Accountants, Attorneys |
| Additional Funds21 | $75,000 to $150,000 | As Incurred | As Incurred | Various Providers, Suppliers and Employees |
| TOTAL22 | $226,784 to 393,084 |  |  |  |

Question 19

How does the initial investment for a City Wide franchise (Item 7) compare to the potential for franchisees to create a valuable asset that can be sold or transferred in the future?

Accepted Answer

| Provision | Section in | Summary |
|---|---|---|
|  | Franchise Agreement | reasonable attorneys’ fees, incurred by CITY WIDE subsequent to termination or expiration in connection with obtaining injunctive or other relief under the Franchise Agreement; provide all signage to CITY WIDE; and take further action as may be required by the Operating Manual or reasonably requested by CITY WIDE; and, if due to your default, forfeit any royalty rebate. |
| j. Assignment of contract by | Section 13 | No restriction on CITY WIDE’s right to assign. |
| Franchisor |  |  |
| k. “Transfer” by you – definition | Section 13 | Includes transfer of contract or assets or change in ownership. |
| l. Franchisor’s approval of transfer | Section 13 | CITY WIDE has the right to approve all transfers, |
| by you |  | but will not unreasonably withhold approval. |
| m. Conditions for Franchisor’s approval of transfer | Section 13 | You must ask CITYWIDE at least 60 days before to approve a transfer; you must pay a Transfer Fee equal to $25,000 and pay any applicable third-party broker fee; you must be in compliance with the Franchise Agreement and Operating Manual; transferee must meet CITY WIDE’s standards, agree to make required upgrades, sign the current form of franchise agreement, and pay all required fees (including Initial Fees). |
| n. Franchisor’s right of first refusal to acquire your business | Section 20 | If you propose to sell the Franchised Business, its assets or part of the ownership of Franchisee, CITY WIDE will have a right of first refusal for 60 days to purchase for the price, terms and conditions offered to you (except CITY WIDE may substitute cash for payment terms). |
| o. Franchisor’s option to purchase your business | Section 20 | When the Agreement terminates or expires, CITY WIDE will have an option, but not an obligation, to purchase from you any assets of the Franchised Business and any materials containing the Marks at the lower of fair market value or your cost; CITY WIDE must notify you within 60 days after the termination or expiration. CITY WIDE shall have up to six months to pay the entirety of the agreed- upon purchase price. |
| p. Your death or disability | Sections 13 & 21 | Survivor or estate may continue to operate if it meets CITY WIDE standards, completes training, and signs an agreement that the survivor or estate agrees to be bound by the Franchise Agreement; Survivor will have up to 60 days to elect to acquire or retain such interest (subject to CITY WIDE’s approval). If Survivor does not desire to acquire or retain such interest, then Survivor will thereafter have six (6) months to make a transfer to a |

Question 20

How does the initial investment for a City Wide franchise (Item 7) compare to the potential long-term financial rewards and equity that franchisees can build over time?

Accepted Answer

You may purchase or lease approved brands and models from approved suppliers.

The cost of the equipment will depend on financing terms available, the size of the Franchise location, brands purchased, and other relevant factors.

You are not required to purchase any equipment, fixtures, etc., from CITY WIDE or any specified source.

However, all equipment, fixtures, construction, leasehold improvements and interior decor (if applicable) must meet CITY WIDE's standards and specifications and must be approved by CITY WIDE.

Local ordinances may result in variances in the type of required equipment, which may affect the total price.

Question 21

How does the initial investment for a City Wide franchise (Item 7) compare to the potential return on investment (ROI) based on the minimum royalty fee schedule and other financial obligations (Item 6)?

Accepted Answer

TIMATED INITIAL INVESTMENT**

#### **YOUR ESTIMATED INITIAL INVESTMENT FRANCHISE AGREEMENT**

| Type of Expenditure1 | Amount | payment | When Due | is to be Made |
|---|---|---|---|---|
| Initial Franchise Fee2 | $70,000 | Lump Sum | At Signing of Franchise Agreement | CITY WIDE |
| Initial Training Fee | $7,500 | Lump Sum | At Signing of Franchise Agreement | CITY WIDE |
| Initial Territory Fee3 | $15,000 to $50,000 | Lump Sum | At Signing of Franchise Agreement | CITY WIDE |
| Technology Provisioning | $12,500 | Lump Sum | At Signing of | CITY WIDE |
| Fee4 |  |  | Franchise Agreement |  |
| Travel and Living Expenses While Training5 | $4,000 to $10,000 | As Incurred | During Training/ Before Opening | Airlines, hotels, Restaurants, Car Rental Companies, and other vendors |
| Real Estate / Rent Deposit6 | $6,000 to $12,000 | As Arranged | Before Opening | Your Landlord |
| Leasehold Improvements7 | $0 to $5,000 | As Arranged | Before Opening | Landlord, Contractors, and Vendors |
| Signage8 | $700 to $2,500 | As Arranged | Before Opening | Approved Suppliers and Vendors |
| Utility and Security | $0 to $3,000 | As Arranged | Before Opening | Landlord and Utility |
| Deposits9 |  |  |  | Companies |
| Furniture, Fixtures, and | $5,000 to $16,000 | As Arranged | Before Opening | Approved Suppliers |
| Equipment10 |  |  |  | and Vendors |
| Computer Hardware, | $7,000 to $10,500 | As Arranged | Before Opening | CITY WIDE |
| Software, Peripherals and |  |  |  |  |
| Licensing Fees11 |  |  |  |  |
| IT Support Services12 | $120 per user per month for the first thirty-six months of operations for ongoing IT desktop services and support. | As Arranged, Monthly | Before Opening | CITY WIDE |
| Accounting Services13 | $1,500 | Monthly | Upon Opening | CITY WIDE |
| Business Development | $3,500 | Monthly | Upon Opening | CITY WIDE |
| Services14 |  |  |  |  |
| Technology Development | $1,864 | Monthly | Upon Opening | CITY WIDE |
| Fee and IT Project |  |  |  |  |
| Development Fees15 |  |  |  |  |
| IT Project Development | $300 | Monthly | Upon Opening | CITY WIDE |
| Fees 15 |  |  |  |  |
| Office Supplies and | $1,400 to $2,100 | Monthly | Upon Opening | CITY WIDE |
| Stationery16 |  |  |  |  |
|  | Amount | Method of | When Due | To Whom Payment |
| Type of Expenditure1 |  | payment |  | is to be Made |
| Recruitment Advertising | $4,500 to $13,500 | As Arranged | As Arranged | CITY WIDE and |
| and Services17 |  |  |  | Various Providers |
| Insurance18 | $1,900 to $5,700 | Installment/As Arranged | Monthly/As Arranged, A Portion Before Opening | Insurance Company |
| Payroll Technology19 | $1,000 to $3,500 | As Arranged | As Incurred | Required Suppliers |
| Professional Fees and License Fees20 | $8,000 to $12,000 | As Arranged | As Incurred | Approved Suppliers, Governmental Agencies, Accountants, Attorneys |
| Additional Funds21 | $75,000 to $150,000 | As Incurred | As Incurred | Various Providers, Suppliers and Employees |
| TOTAL22 | $226,784 to 393,084 |  |  |  |#### **NOTES:**

- (1) Type of Expenditure: All fees are uniformly imposed by and are payable to CITY WIDE, unless otherwise noted. Any interest owed begins to accrue from the date of underpayment. No other fees or payments are to be paid to CITY WIDE, nor does CITY WIDE impose or collect any other fees or payments for any third party. Any fees paid to CITY WIDE are nonrefundable unless otherwise noted. Any fees paid to any third party may be refundable, depending upon the contracts, if any, between a third party and you. CITY WIDE relied on its own experience in the business, and that of CITY WIDE's Affiliates, to compile these estimates. You should review these estimates carefully with a business advisor before making any decisions to purchase the Franchised Business.
- (2) Initial Franchise Fee: Upon your execution of the Franchise Agreement, the Initial Franchise Fee is deemed to be fully earned and non-refundable under any circumstances, except as provided in ITEM 5.
- (3) Initial Territory Fee: Upon your execution of the Franchise Agreement, the Initial Territory Fee is deemed to be fully earned and non-refundable under any circumstances.
- (4) Technology Provisioning Fee: This fee is for us to set you up on our CITY WIDE intranet computer software and customer relationship management software to facilitate communication and collaboration with us and the System.
- (5) Travel and Living Expenses While Training: You must participate in CITY WIDE's training programs. You must involve your Manager (as defined in ITEM 15) in all CITY WIDE training programs as stated in ITEM 11 of this Disclosure Document. The fee for the initial training program is covered by the Initial Franchise Fee. However, you must make arrangements for and pay the expenses of any persons attending the training program on your behalf, including transportation, lodging, meals and wages. The amount will depend, in part, on the distance you must travel and the type of accommodation you choose. The estimate is for attendance by two people.
- (6) Real Estate/Rent Deposit: Rent expense (sometimes first month's rent required in advance) for the Location (as defined in ITEM 11) will vary based on location and square footage, and other factors.

Question 22

How does the initial investment for a City Wide franchise (Item 7) compare to the potential revenue generated based on the minimum royalty fee schedule (Item 6)?

Accepted Answer

[Item 7: ESTIMATED INITIAL INVESTMENT]

| Type of Expenditure1 | Amount | payment | When Due | is to be Made |
|---|---|---|---|---|
| Initial Franchise Fee2 | $70,000 | Lump Sum | At Signing of Franchise Agreement | CITY WIDE |
| Initial Training Fee | $7,500 | Lump Sum | At Signing of Franchise Agreement | CITY WIDE |
| Initial Territory Fee3 | $15,000 to $50,000 | Lump Sum | At Signing of Franchise Agreement | CITY WIDE |
| Technology Provisioning | $12,500 | Lump Sum | At Signing of | CITY WIDE |
| Fee4 |  |  | Franchise Agreement |  |
| Travel and Living Expenses While Training5 | $4,000 to $10,000 | As Incurred | During Training/ Before Opening | Airlines, hotels, Restaurants, Car Rental Companies, and other vendors |
| Real Estate / Rent Deposit6 | $6,000 to $12,000 | As Arranged | Before Opening | Your Landlord |
| Leasehold Improvements7 | $0 to $5,000 | As Arranged | Before Opening | Landlord, Contractors, and Vendors |
| Signage8 | $700 to $2,500 | As Arranged | Before Opening | Approved Suppliers and Vendors |
| Utility and Security | $0 to $3,000 | As Arranged | Before Opening | Landlord and Utility |
| Deposits9 |  |  |  | Companies |
| Furniture, Fixtures, and | $5,000 to $16,000 | As Arranged | Before Opening | Approved Suppliers |
| Equipment10 |  |  |  | and Vendors |
| Computer Hardware, | $7,000 to $10,500 | As Arranged | Before Opening | CITY WIDE |
| Software, Peripherals and |  |  |  |  |
| Licensing Fees11 |  |  |  |  |
| IT Support Services12 | $120 per user per month for the first thirty-six months of operations for ongoing IT desktop services and support. | As Arranged, Monthly | Before Opening | CITY WIDE |
| Accounting Services13 | $1,500 | Monthly | Upon Opening | CITY WIDE |
| Business Development | $3,500 | Monthly | Upon Opening | CITY WIDE |
| Services14 |  |  |  |  |
| Technology Development | $1,864 | Monthly | Upon Opening | CITY WIDE |
| Fee and IT Project |  |  |  |  |
| Development Fees15 |  |  |  |  |
| IT Project Development | $300 | Monthly | Upon Opening | CITY WIDE |
| Fees 15 |  |  |  |  |
| Office Supplies and | $1,400 to $2,100 | Monthly | Upon Opening | CITY WIDE |
| Stationery16 |  |  |  |  |
|  | Amount | Method of | When Due | To Whom Payment |
| Type of Expenditure1 |  | payment |  | is to be Made |
| Recruitment Advertising | $4,500 to $13,500 | As Arranged | As Arranged | CITY WIDE and |
| and Services17 |  |  |  | Various Providers |
| Insurance18 | $1,900 to $5,700 | Installment/As Arranged | Monthly/As Arranged, A Portion Before Opening | Insurance Company |
| Payroll Technology19 | $1,000 to $3,500 | As Arranged | As Incurred | Required Suppliers |
| Professional Fees and License Fees20 | $8,000 to $12,000 | As Arranged | As Incurred | Approved Suppliers, Governmental Agencies, Accountants, Attorneys |
| Additional Funds21 | $75,000 to $150,000 | As Incurred | As Incurred | Various Providers, Suppliers and Employees |
| TOTAL22 | $226,784 to 393,084 |  |  |  |

[Item 6: OTHER FEES]

#### **NOTES:**

- (1) Type of Fee: These fees are uniformly imposed by CITY WIDE and are payable to CITY WIDE. All fees are nonrefundable unless otherwise stated.
- (2) Royalty Fee: You are required to pay to CITY WIDE a royalty fee ("**Royalty Fee**") the greater of 5% of total Gross Sales or the minimum Royalty Fee ("**Minimum Royalty Fee**"). "**Gross Sales**" includes all of the Franchised Business's revenues invoiced by anyone and in anyway resulting from the conduct and operation of your Franchised Business, or from any business which is derived from or similar

Question 23

In which of the listed states did City Wide NOT have any franchise transfers in 2022?

Accepted Answer

| State | Year | Number of Transfers |
|---|---|---|
| California | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 1 |
| Connecticut | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| New Jersey | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| Illinois | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| New York | 2022 | 0 |
|  | 2023 | 1 |
|  | 2024 | 0 |
| Pennsylvania | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| Florida | 2022 | 0 |
|  | 2023 | 0 |
|  | 2024 | 1 |
| TOTAL | 2022 | 0 |
|  | 2023 | 3 |
|  | 2024 | 5 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–65)

Question 24

How many City Wide franchised locations are included in the First Quartile for the 2023 and 2024 fiscal years, respectively?

Accepted Answer

The first quartile is comprised of the 22 franchised locations that generated the most Gross Sales during the 2023 fiscal year and the 23 franchised locations that generated the most Gross Sales during the 2024 fiscal year ("**First Quartile**"); the second quartile is comprised of the next 21 franchised locations for the 2023 fiscal year and the next 23 locations for the 2024 fiscal year ("**Second Quartile**"); the third quartile is comprised of the next 21 franchised locations for the 2023 fiscal year and the next 23 franchised locations for the 2024 fiscal year ("**Third Quartile**"); and the fourth quartile is comprised of the remaining 21 franchised locations for the 2023 fiscal year and the remaining 24 franchised locations for the 2024 fiscal year ("**Fourth Quartile**").

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 48–58)

Question 25

Within how many days of executing the Franchise Agreement must I provide adequate proof of financing or sufficient assets in an acceptable form to avoid potential termination of the City Wide Franchise Agreement?

Accepted Answer

your Initial Fees, less an evaluation fee which will not exceed \$2,500.
- b. If you are unable to provide adequate proof of financing or have sufficient assets and in an acceptable form, at CITY WIDE's sole and absolute right, within 30 days of the execution of the Franchise Agreement, then upon written notice by either party, CITY WIDE or you may terminate the Franchise Agreement and CITY WIDE will refund the Initial Fees paid to CITY WIDE by you, less the sum of \$2

Source: Item 5 — INITIAL FEES (FDD pages 15–16)

Question 26

For the 2024 Quartile Reporting Criteria, what is the minimum operating period required for a City Wide franchise to be included?

Accepted Answer

- (1) As of December 31, 2024, CITY WIDE had 98 CITY WIDE franchisees operating in the CITY WIDE System (including three franchised outlets owned by CITY WIDE's principals). Of the total number of CITY WIDE franchisees operating, 93 CITY WIDE franchisees met all of the following criteria ("**2024 Quartile Reporting Criteria**"): each CITY WIDE franchise was operated under a standard Franchise Agreement, had been open and operating for at least one full 12-month period by December 31, 2024 ("**2024 Quartile Reporting Period**"), had submitted required Royalty Fee reports, and had operated continuously during the period between January 1, 2024, and December 31, 2024. In addition, during the 2024 Quartile Reporting Period, CITY WIDE had 85 CITY WIDE franchisees that had been operating at least 24 full months, 69 CITY WIDE franchisees that had been operating at least 36 full months, 66 CITY WIDE franchisees that had been operating at least 48 months, and 60 CITY WIDE franchises that had been operating at least 60 months. The results of the remaining CITY WIDE franchisee did not satisfy one or more of the Quartile Reporting Criteria. All CITY WIDE franchisees that satisfied the Quartile Reporting Criteria are included in this table.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 48–58)

Question 27

According to the City Wide Franchise Agreement, what happens if City Wide determines that a finding of illegality adversely affects the basic consideration of the agreement?

Accepted Answer

- 28.1 Each paragraph, part, term and provision of this Agreement will be considered severable, and if, for any reason, any paragraph, part, term or provision is determined to be invalid and contrary to, or in conflict with, any existing or future law or regulation, such will not impair the operation of or affect the remaining portions, sections, parts, terms and/or provisions of this Agreement, and the latter will continue to be given full force and effect and bind the parties; and the invalid sections, parts, terms and/or provisions will be deemed not part of this Agreement; provided, however, that if CITY WIDE determines that the finding of illegality adversely affects the basic consideration of this Agreement, CITY WIDE may, at its option, terminate this Agreement.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 28

Does City Wide have to approve a transfer if the proposed transferee meets their standards and the franchisee is in compliance?

Accepted Answer

Any purported assignment or transfer, by operation of law or otherwise, not having the prior written consent of CITY WIDE will be null and void and will constitute a material breach of this Agreement entitling CITY WIDE, at its sole and absolute right, to immediately terminate this Agreement; provided however, that CITY WIDE will not unreasonably withhold its approval of a Transfer to a proposed transferee who is of good moral character and whose business experience and aptitude, financial resources, and other qualifications meet CITY WIDE's then-current standards, so long as Franchisee is in full compliance with this Agreement at the time of the proposed Transfer.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 29

Can the Business Development Services Fee for a City Wide franchise vary?

Accepted Answer

- 3.7.4 Business Development Services Fee. Franchisee is required to use Franchisor's Business Development Services to assist Franchisee in prospecting

Source: Item 22 — CONTRACTS (FDD page 65)

Question 30

Can the Business Development Services Fee for City Wide franchisees vary?

Accepted Answer

- 3.7.4 Business Development Services Fee. Franchisee is required to use Franchisor's Business Development Services to assist Franchisee in prospecting

Source: Item 22 — CONTRACTS (FDD page 65)

Question 31

Will City Wide charge the Franchisee a fee for major upgrades or modifications to the software?

Accepted Answer

IT Services will include minor Software upgrades and modifications; provided, however, City Wide reserves the right to determine when major upgrades or modifications are necessary and shall have the right to charge Franchisee a reasonable fee for the same.

If City Wide determines that a major upgrade or modification is necessary, Franchisee shall implement the Software change in a manner and time designated by City Wide.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 32

What circumstances could potentially cause a material change in City Wide's estimate regarding the impact of claims and lawsuits on its financial position in the near term?

Accepted Answer

The Company is subject to claims and lawsuits that arose primarily in the ordinary course of business. It is the opinion of management the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company. Events could occur that would change this estimate materially in the near term.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 65)

Question 33

Before commencing business activities, what is the first action a City Wide franchisee must take regarding their office?

Accepted Answer

to operate the Franchised Business within the Designated Territory, as described and outlined in **Attachment B**, from the Office as outlined in Section 6.3, subject to the reservation of rights set forth in Section 6.7 below.
- 6.2 Franchisee is not permitted to make material alterations to the trade dress, equipment, fixtures, signs or other materials or items bearing the Marks of the Franchisor in the Designated Territory, without prior written approval by CITY WIDE.
- 6.3 Franchisee shall establish an office for the Franchised Business ("**Office**") within the Designated Territory before the commencement of any business or promotional activities, which will typically be between 1,000 to 2,000 square feet. At a minimum, such Office shall include telephone service dedicated to the Franchised Business which will be answered by an employee, telephone answering service or voice mail (or combination thereof) and which will take calls from customers or employees twenty-four

(24) hours a day and include a specific reference that identifies the number as being associated with CITY WIDE.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 34

What is the condition that induces the Guarantors to guarantee the obligations of the Franchisee to City Wide?

Accepted Answer

**WHEREAS**, CITY WIDE desires to accept such guarantee.

**NOW, THEREFORE**, in consideration of the covenants and conditions herein set forth, and in order to induce CITY WIDE to enter into the Franchise Agreement, the Spousal Guarantor hereby agrees as follows:

**SECTION 1. Guaranty.** Spousal Guarantor hereby unconditionally guarantees the punctual payment when due, whether at stated maturity, by acceleration, or otherwise, of all obligations of Franchisee now or hereafter existing under the Franchise Agreement, whether for fees, expenses, interest, or otherwise (collectively, "**Obligations**"), and agrees to pay any and all expenses (including attorney fees and expenses) incurred by CITY WIDE in enforcing any rights under this Guaranty, except to the extent limited by Section 5 below.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 35

What conditions must Dauntless satisfy to obtain a successor term from City Wide?

Accepted Answer

1, in Minneapolis, Minnesota.

#### **ITEM 3 LITIGATION**

*Dauntless Enterprises, Inc. and Kenneth Ayers v. City Wide Franchise Company, Inc.* (United States District Court for the District of Kansas, Case No. 2:23-cv-02273, filed June 16, 2023). Dauntless Enterprises, Inc., a CITY WIDE franchisee ("Dauntless"), and Kenneth Ayers, its owner ("Ayers"), filed this suit against CITY WIDE seeking a preliminary injunction in connection with the expiration of Dauntless' franchise agreement. Plaintiffs alleged that Dauntless satisfied each of the renewal conditions set forth in the franchise agreement with CITY WIDE and was therefore entitled to a 10-year renewal term of the franchise agreement. CITY WIDE disagreed that Dauntless satisfied all renewal conditions (although CITY WIDE had agreed provide a step-up renewal if Dauntless met certain financial and operational milestones). In their Complaint, plaintiffs alleged breach of contract against CITY WIDE and further sought to enjoin CITY WIDE from: (i) refusing to renew Dauntless' franchise agreement and (ii) terminating the franchise agreement upon the expiration of the initial 15-year term on June 19, 2023, pending a final ruling on plaintiffs' claims in arbitration. CITY WIDE opposed plaintiff's motion for preliminary injunction. On or around June 22, 2023, Dauntless and Ayers filed a demand for arbitration alleging breach of contract and breach of the covenant of good faith and fair dealing, seeking to require CITY WIDE to specifically perform the franchise agreement by entering into a new franchise agreement for a 10-year term. The parties settled all claims on July 7, 2023. Under a definitive settlement agreement dated July 28, 2023, the parties extended the initial term of the franchise agreement through December 31, 2026 (the "2026 Calendar Year") and provided Dauntless with the option to obtain a successor term from January 1, 2027, through April 3, 2033, if Dauntless satisfies certain renewal conditions. The renewal conditions vary depending on the amount of Gross Sales that Dauntless will achieve in the 2026 Calendar Year. Pursuant to the settlement agreement, Dauntless also agreed to retain at least four sales executives throughout the term of the franchise agreement, including any successor term. On August 1, 2023, the arbitration and federal court case were both dismissed with prejudice.

Other than the action described above, no litigation is required to be disclosed in this ITEM.

#### **ITEM 4 BANKRUPTCY**

No bankruptcies are required to be disclosed in this ITEM.

#### **ITEM 5 INITIAL FEES**

#### **Initial Fees**

Upon your execution of the Franchise Agreement, you must pay to CITY WIDE the initial franchise fee ("**Initial Franchise Fee**") of \$70,000 for the right to operate one CITY WIDE franchise. The Initial Franchise Fee is imposed uniformly on all franchisees (including franchisees who purchase existing territories). You must also pay an initial training fee ("**Initial Training Fee**") in the amount of \$7,500.

To honor those men and women who have served in the U.S. military, the Veterans Transition Franchise Initiative, known as "VetFran," was developed to help those individuals' transition to civilian life. This initiative is a voluntary effort of International Franchise Association (IFA) member-companies and is designed to encourage franchise ownership by offering financial incentives to honorably discharged veterans. CITY WIDE offers a ten percent (10%) discount of the Initial Franchise Fee for the first Franchised Business to individuals who qualify under VetFran.

In addition to the Initial Franchise Fee and Initial Training Fee, upon your execution of the Franchise Agreement, you must pay to **CITY WIDE** an initial territory fee ("**Initial Territory Fee**"), which is based upon your Designated Territory's population (as set forth in **Attachment B** to the Franchise Agreement), as set forth in the following chart:

| TERRITORY SIZE                       | INITIAL TERRITORY FEE |
|--------------------------------------|-----------------------|
| Less than 1,000,000 population       | \$15,000              |
| 1,000,001 to 1,499,999 | \$30,000 |
| population |  |
| 1,500,000 – | \$35,000 |
| 1,999,999 |  |
| 2,000,000 | \$50,000 |
| and above |  |

All population determinations shall be based upon the latest United States Census information available for the proposed Designated Territory, including any data available at https://www.census.gov. The determination of a Designated Territory's size and the Initial Territory Fee to be paid for such Designated Territory shall be at the sole and absolute right of CITY WIDE. The Initial Territory Fee is deemed to be fully earned and non-refundable under any circumstances.

A technology provisioning fee ("**Technology Provisioning Fee**") of \$12,500 is payable to CITY WIDE prior to the opening of the Franchised Business. The Technology Provisioning Fee is payment for the establishment of the CITY WIDE proprietary operating software systems.

CITY WIDE refers to the Initial Franchise Fee, Initial Training Fee, Initial Territory Fee and the Technology Provisioning Fee collectively as "**Initial Fees**." In CITY WIDE's most recent fiscal year, the range of Initial Fees CITY WIDE collected was from \$105,000 to \$140,000, due to the size of the franchisees' respective territories.

#### **Non-Refundability of Initial Fees**

Upon your execution of the Franchise Agreement, the Initial Franchise Fee and Initial Territory Fee are deemed to be fully earned and non-refundable under any circumstances, except as provided below:

- a. If CITY WIDE, at its sole and absolute right, after evaluating your personal abilities, aptitudes and financial qualifications to be a franchisee, elects within 15 days following the submission of all data to terminate your Franchise Agreement, you will receive a refund of your Initial Fees, less an evaluation fee which will not exceed \$2,500.
- b. If you are unable to provide adequate proof of financing or have sufficient assets and in an acceptable form, at CITY WIDE's sole and absolute right, within 30 days of the execution of the Franchise Agreement, then upon written notice by either party, CITY WIDE or you may terminate the Franchise Agreement and CITY WIDE will refund the Initial Fees paid to CITY WIDE by you, less the sum of \$2,500 as liquidated damages. (See Section 3.4 of the Franchise Agreement)
- c.

Source: Item 3 — LITIGATION (FDD page 14)

Question 36

What conditions must a City Wide franchisee meet to maintain the exclusive right to operate in their Designated Territory?

Accepted Answer

- 1.1 Subject to all the terms and conditions contained in this Agreement, CITY WIDE grants Franchisee the exclusive right and license to operate a Franchised Business using the System, Software (as defined in Section 11), and Marks solely in the territory ("**Designated Territory**") as outlined in **Attachment B**, which is attached to and made a part of this Agreement by reference. Franchisee accepts such right and license, subject to such terms and conditions, and agrees to operate the Franchised Business and to use the System, Software and Marks solely in connection with the Franchised Business.
- 1.2 So long as this Agreement is in force and effect and Franchisee is not in material default under any of its terms, Franchisee will have the exclusive right to operate a Franchised Business in the Designated Territory. Other than in the Designated Territory described in **Attachment B**, CITY WIDE may itself operate or license to others the right to operate Franchised Businesses utilizing the System and the Marks.

At all times Franchisee will be directly engaged in the day-to-day management and oversight of the Franchised Business for the purpose of generating business and increasing the inherent value of the Franchised Business and the System.

Franchisee must live year-round and full time in the Designated Territory.

- 6.5 To retain rights to the Designated Territory, Franchisee must meet the annual revenue per capita growth ("**Annual Revenue Per Capita Growth**") in every year in the Term of the Agreement, as published on uscensus.gov. Specifically, Franchisee will be required to grow the gross revenues generated by the Franchised Business to no less than $0.20 per person per year. Franchisees must meet this requirement each year; however, CITY WIDE will measure this requirement using a three-year rolling average. CITY WIDE will measure Franchisee's Annual Revenue Per Capita Growth by calculating the average revenues generated by Franchisee's Franchised Business in the preceding two (2) years of operations. Each year thereafter, CITY WIDE will measure Franchisee's Annual Revenue Per Capita Growth by calculating the average revenues generated by Franchisee's Franchised Business in the immediately preceding two (2) years of operations. Each year thereafter, CITY WIDE will measure Franchisee's Annual Revenue Per Capita Growth by calculating the average revenues generated by Franchisee's Franchised Business in the immediately preceding two (2) years of operations. If Franchisee fails to satisfy the Annual Revenue Per Capita Growth requirement on a rolling two (2) year average, it will be deemed a material breach of this Agreement, and CITY WIDE will then have the right to reduce the size of Franchisee's Designated Territory, grant additional franchises within the Designated Territory or to terminate this Agreement, provided that there will be a period not to exceed one (1) year to cure such a breach.

7.15 Revenue and Profit Maximization; Budget and Strategic Plan. Franchisee will always use Franchisee's best efforts to diligently operate the Franchised Business so as to maximize the revenues and profits and will do all things reasonably requested by CITY WIDE to maximize revenues and profits. Franchisee always agrees and covenants to comply with CITY WIDE's minimum staffing requirements as set forth in the Operating Manual. Franchisee acknowledges and agrees that Franchisee's failure to comply with this requirement shall constitute a material default of this Agreement for which CITY WIDE may terminate this Agreement or: (a) reduce Franchisee's Designated Territory size; (b) reduce the number of field visits that CITY WIDE provides to Franchisee during the Agreement; (c) require Franchisee to attend additional training at Franchisee's expense; (d) prohibit Franchisee from attending any annual conference, convention, or training session that CITY WIDE may periodically conduct; (e) deem Franchisee ineligible for any awards bestowed upon franchisees by CITY WIDE and (f) reduce or eliminate the level of support and services CITY WIDE provides to Franchisee.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 37

What conditions must be met for a release or waiver to be valid after the City Wide franchise agreement is in effect?

Accepted Answer

- 2.2.5 Franchisee must not be in default of any provision of this Agreement, any amendment to this Agreement, or any other agreement between CITY WIDE or its respective subsidiaries or affiliates, and at all times Franchisee must have substantially complied with all the terms and conditions of this Agreement and any other agreements between the parties during the respective Terms, including but not limited to then current Annual Revenue Per Capita Growth requirement (See Section 6.5).

- 2.2.6 Franchisee's operation of the Franchised Business must be in full compliance with the standards, specifications, requirements, instructions set forth in this Agreement and in the Operating Manual of CITY WIDE.

- 2.2.7 Franchisee's operations under all other Franchise Agreements, if any, must be in full compliance with the standards, specifications, requirements, instructions set forth under all other Franchise Agreements and in the Operating Manual of CITY WIDE.

- 2.2.8 Franchisee must have satisfied all monetary obligations Franchisee owes to CITY WIDE and its subsidiaries and affiliates and timely met such obligations throughout the respective Term.

- 2.2.9 Franchisee must execute the form of franchise agreement being used by CITY WIDE at the time Franchisee renews, including the Successor Addendum (See Attachment J) (collectively, "**Successor Franchise Agreement**"), which Successor Franchise Agreement will in all respects supersede this Agreement and the terms of which may differ from the terms of this Agreement, including, without limitation, a higher percentage Royalty Fee (See Section 3.7.1) and Marketing Fee (See Section 3.7.2(a).

- 2.2.10 Franchisee must pay CITY WIDE a renewal fee ("**Successor Fee**") equal to fifty percent (50%) of the then-current Initial Franchise Fee set forth in the Franchise Disclosure Document , at the time Franchisee executes the Successor Franchise Agreement which amount will be instead of payment of a new Initial Franchise Fee.

- 2.2.11 Franchisees must comply with CITY WIDE's then-current criteria for operating a Franchised Business, including CITY WIDE's then-current franchisee qualification and training requirements.

- 2.2.12 Franchisee must execute a general release, in a form CITY WIDE prescribes, releasing any claims against CITY WIDE or its subsidiaries, affiliates, officers, directors, agents, and employees which Franchisee may have or assert at time of renewal; and

- 2.2.13 Franchisee must present evidence satisfactory to CITY WIDE that Franchisee has the right to remain in possession of the Location of the Office (See Item 12) for the Term, or a mutually acceptable alternative Location.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 38

What is the consequence of not meeting the Annual Revenue Per Capita Growth for City Wide?

Accepted Answer

Term or any Successor Term as outlined in the Manual. Franchisee shall not change the Location without CITY WIDE's approval. Franchisee shall give CITY WIDE at least thirty (30) days prior written notice of any such change and CITY WIDE shall have thirty (30) days within which to approve such Location and the proposed décor and signage. If CITY WIDE does not disapprove of such Location, décor or signage within such thirty (30) day period, same shall be deemed disapproved.
- 6.5 To retain rights to the Designated Territory, Franchisee must meet the annual revenue per capita growth ("**Annual Revenue Per Capita Growth**") in every year in the Term of the Agreement, as published on uscensus.gov. Specifically, Franchisee will be required to grow the gross revenues generated by the Franchised Business to no less than \$0.20 per person per year. Franchisees must meet this requirement each year; however, CITY WIDE will measure this requirement using a three-year rolling average. CITY WIDE will measure Franchisee's Annual Revenue Per Capita Growth by calculating the average revenues generated by Franchisee's Franchised Business in the preceding two (2) years of operations. Each year thereafter, CITY WIDE will measure Franchisee's Annual Revenue Per Capita Growth by calculating the average revenues generated by Franchisee's Franchised Business in the immediately preceding two (2) years of operations. Each year thereafter, CITY WIDE will measure Franchisee's Annual Revenue Per Capita Growth by calculating the average revenues generated by Franchisee's Franchised Business in the immediately prec

Source: Item 22 — CONTRACTS (FDD page 65)

Question 39

Are covenants not to compete enforceable for City Wide franchises upon termination or expiration of the Franchise Agreement in North Dakota?

Accepted Answer

"Covenants not to compete upon termination or expiration of the Franchise Agreement are generally unenforceable in the State of North Dakota except in limited instances as provided by law."

Source: Item 22 — CONTRACTS (FDD page 65)

Question 40

What criteria must a City Wide franchisee have met to be included in the 'Average 2023 Gross Sales Reporting Criteria'?

Accepted Answer

- (1) As of December 31, 2023, CITY WIDE had 98 CITY WIDE franchisees operating in the CITY WIDE System. Of the total number of CITY WIDE franchisees operating, 85 CITY WIDE franchisees met all of the following criteria ("**Average 2023 Gross Sales Reporting Criteria**"): each CITY WIDE franchise was operated under a standard Franchise Agreement, had been open and operating for at least one full 12 month period by December 31, 2023 ("**Average 2023 Gross Sales Reporting Period**"), had submitted required Royalty Fee reports, and had operated continuously during the period between January 1, 2023 and December 31, 2023. The results of the remaining 14 CITY WIDE franchisee did not satisfy one or more of the Average 2023 Gross Sales Reporting Criteria. All CITY WIDE franchisees that satisfied the Average 2023 Gross Sales Reporting Criteria are included in this table.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 48–58)

Question 41

What is the definition of 'Control' in the context of transferring a City Wide franchise?

Accepted Answer

Notwithstanding Section 13.2, if Franchisee or any Affiliated Company is a corporation, the terms and conditions of this Section 13 will not be deemed to apply to any Transfer of the voting stock of, or other ownership interest in, Franchisee or such Affiliated Company, which would not, alone or together with other related or unrelated, previous, simultaneous or proposed Transfers, result in a loss of Control (as defined below) of Franchisee or an Affiliated Company by the persons and/or entities listed on the Acknowledgment Regarding Ownership attached to this Agreement as **Attachment G**.

For the purposes of this Section 13.3 and Section 13.6 of this Agreement, "**Control**" means:

- 13.3.1 If Franchisee, an Affiliated Company, or an Owner owns (1) possession or control, whether by ownership of voting securities or otherwise, of fifty-one percent (51%) or more of the voting power in Franchisee or an Affiliated Company, or (2) the contractual power to designate a majority of the directors of Franchisee or an Affiliated Company.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 42

What is the dependency between the Accounting Services Agreement and the Accounting Services Fee for City Wide franchisees?

Accepted Answer

ranchisee's monthly Gross Sales, or as outlined in the Operating Manual. Franchisee must make all such payments to

the CITY WIDE Marketing Fund ("**Fund**"). CITY WIDE or its designee may expend amounts in the Fund by the terms of Section 10 of this Agreement.

- (b) Local Advertising. Franchisee must spend at least \$1,200 annually on Franchisee's own advertising and promotion as outlined in the Operating Manual.
- 3.7.3 Accounting Services Fee. Franchisee is required to use Franchisor's financial reporting, bookkeeping and other accounting services for the first twelve (12)

Source: Item 22 — CONTRACTS (FDD page 65)

Question 43

What is the dependency for a City Wide franchisee to designate a manager?

Accepted Answer

ory. If more than one (1) individual has executed this Agreement as Franchisee, Franchisee must designate one (1) individual who will devote his or her full time and will be directly involved in the operation of the Franchised Business. Franchisee will always faithfully, honestly, and diligently perform Franchisee's obligations under this Agreement and will not engage in any business or other activities that will conflict with Franchisee's obligations under this Agreement
- 7.11.1 If the Franchised Business is in the top twenty-five percent (25%) of the System in terms of Annual Revenue Per Capita Growth or a similar metric established from time to time by CITY WIDE, Franchisee may designate a trained and competent employee to be a full-time manager ("**Manager**") to run the day-to-day operations of the Franchised Business with Franchisee providing its continued support to the Manager, subject to CITY WIDE'S sole and absolute discretion and the conditions set forth below. Where the Franchised Business is the first CITY WIDE business in the Designated Territory or surrounding area, the option of appointing a Manager is not available. The Franchisee must directly operate and manage the Franchised Business. Where a Franchisee is wishing to designate a Manager, the following minimum conditions must be met:
- (a) Manager must meet the then-criteria used by CITY WIDE for approving new franchisees.
- (b) Manager must have the necessary experience in accordance with the Operating Manual to operate the Franchised Business.
- (c) Manager must own at least a twenty percent (20%) interest in Franchised Business (if Franchisee is an entity, Manager must own twenty percent (20%) of the entity that owns the Franchised Business); provided however, that CITY WIDE may agree to an alternative arrangement (other than direct ownership by the Manager) in exceptional circumstances.

- (d) Manager must live in the Designated Territory and must devote fulltime, year round and best efforts to supervising the operation of the Franchised Business on a daily basis. CITY WIDE reserves the right to request proof of residency of either Franchisee or your Manager, as applicable, and proof of your Manager's ownership interest, if you nominate a Manager.
- (e) The Manager must sign the Guaranty and Assumption of Obligations, the Confidentiality Agreement, and the Non-Compete Agreement, attached hereto as Attachments A, E and F respectively.
- (f) The Franchised Business must remain in the top twenty-five percent (25%) of the System in terms of Annual Revenue Per Capita Growth or a similar metric established from time to time by CITY WIDE.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 44

What is the dependency between meeting the Annual Revenue Per Capita Growth and retaining rights to the Designated Territory for City Wide?

Accepted Answer

Term or any Successor Term as outlined in the Manual. Franchisee shall not change the Location without CITY WIDE's approval. Franchisee shall give CITY WIDE at least thirty (30) days prior written notice of any such change and CITY WIDE shall have thirty (30) days within which to approve such Location and the proposed décor and signage. If CITY WIDE does not disapprove of such Location, décor or signage within such thirty (30) day period, same shall be deemed disapproved.
- 6.5 To retain rights to the Designated Territory, Franchisee must meet the annual revenue per capita growth ("**Annual Revenue Per Capita Growth**") in every year in the Term of the Agreement, as published on uscensus.gov. Specifically, Franchisee will be required to grow the gross revenues generated by the Franchised Business to no less than \$0.20 per person per year. Franchisees must meet this requirement each year; however, CITY WIDE will measure this requirement using a three-year rolling average. CITY WIDE will measure Franchisee's Annual Revenue Per Capita Growth by calculating the average revenues generated by Franchisee's Franchised Business in the preceding two (2) years of operations. Each year thereafter, CITY WIDE will measure Franchisee's Annual Revenue Per Capita Growth by calculating the average revenues generated by Franchisee's Franchised Business in the immediately preceding two (2) years of operations. Each year thereafter, CITY WIDE will measure Franchisee's Annual Revenue Per Capita Growth by calculating the average revenues generated by Franchisee's Franchised Business in the immediately prec

Source: Item 22 — CONTRACTS (FDD page 65)

Question 45

What determines if City Wide will charge a fee for software upgrades or modifications?

Accepted Answer

IT Services will include minor Software upgrades and modifications; provided, however, City Wide reserves the right to determine when major upgrades or modifications are necessary and shall have the right to charge Franchisee a reasonable fee for the same.

If City Wide determines that a major upgrade or modification is necessary, Franchisee shall implement the Software change in a manner and time designated by City Wide.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 46

Does this document specify any conditions under which the City Wide Franchise Agreement can be terminated?

Accepted Answer

- 3.

Termination.

Unless otherwise agreed to by the Parties, a t any time after the Initial Term, either Partymay terminate this Agreement upon providing ninety (90) days written notice to the other Party, with the termination effective on the ninetieth day from date of delivery of the written notice.

City Wide will have the right, without incurring any liability to Franchisee, by notice in writing effective when given, to terminate this Agreement in the event the Franchise Agreement is terminated by City Wide.

- 14.1.5 If Franchisee knowingly maintains false books or records or make or have made any materially false statement or report to CITY WIDE in connection with this Agreement or Franchisee's application for this Franchise; or

- 14.1.6 If CITY WIDE, at its sole and absolute right, determines that Franchisee or any person Franchisee designates for mandatory training pursuant to Section 4.1 of this Agreement has not satisfactorily completed the training or been approved by CITY WIDE after a face-to-face interview and evaluation; or

- 14.1.7 If Franchisee commits two or more acts of default under this Agreement within any twelve (12) month period, regardless of whether such defaults are cured or waived; provided, however, that a default under Section 6.5 ("Annual Revenue Per Capita Growth") will not be counted for purposes of applying this subsection; or

- 14.1.8 If Franchisee fails to operate and equip the Franchised Business as provided in Sections 6 and 7 of this Agreement; or

- 14.1.9 If Franchisee is a party to any other franchise agreement with CITY WIDE which agreement CITY WIDE has terminated in accordance with the terms and conditions of such other

franchise agreement (unless such termination is based solely on Franchisee's failure to meet the Annual Revenue Per Capita Growth requirements or similar growth requirements); or

- 14.1.10 If Franchisee fails to operate the Franchised Business during normal business hours for a period of seven (7) days or more without the prior written consent of CITY WIDE or any other circumstance which would lead a reasonable person to believe that Franchisee has permanently left the Franchised Business, and CITY WIDE will declare that Franchisee have abandoned the business for purposes of this Agreement.

- 14.2 Termination After Failure to Cure.

Franchisee will be deemed to be in default under this Agreement and CITY WIDE may elect to terminate this Agreement and all rights granted under this Agreement if within thirty (30) days after CITY WIDE sends Franchisee written notification setting out the nature of the default ("**Notice to Cure**"), or within any such period set forth in this Agreement or permissible by law, Franchisee does not correct the default to CITY WIDE's satisfaction:

- 14.2.15 If Franchisee breaches any other covenant, agreement, obligation, term, warranty, condition, or certification contained in this Agreement.

- 14.3 Breach of Related Agreement.

If Franchisee defaults under any term of any agreement material to the Franchised Business or any other Franchise Agreement, Development Agreement or other contract or agreement between CITY WIDE or its affiliates, on the one hand, and Franchisee or a Franchisee Affiliated Company, on the other hand, and such default is not cured within the time specified in such agreement, contract or other franchise agreement, such default shall be deemed a default under this Agreement.

- 15.2 At the end of the Term of this Agreement, whether because of an event of default pursuant to Section 14 above or otherwise, Franchisee will immediately do each of the following:

- 15.2.2 Pay all sums owing to CITY WIDE.

Upon termination of this Agreement for any default by Franchisee, such sums will include lost Royalties Fees, Marketing Fees and other fees for the remainder of the Term, and other damages, costs, and expenses incurred by CITY WIDE as a result of the default.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 47

What is the effect of a transfer of a City Wide franchise if the franchisee is not in full compliance with the agreement?

Accepted Answer

le law to constitute notice of the restrictions on such stock contained in this

Agreement and to allow such restrictions to be enforceable. Such legend will appear in substantially the following form:

| "The sale, transfer, pledge, or hypothecation of this stock is restricted |  |  |
|---------------------------------------------------------------------------|--|--|
| pursuant to an option, the terms of which are contained in a Franchise    |  |  |
| Agreement dated between CITY WIDE                                         |  |  |
| FRANCHISE COMPANY, INC., and"                                             |  |  |

Any purported assignment or transfer, by operation of law or otherwise, not having the prior written consent of CITY WIDE will be null and void and will constitute a material breach of this Agreement entitling CITY WIDE, at its sole and absolute right, to immediately terminate this Agreement; provided however, that CITY WIDE will not unreasonably withhold its approval of a Transfer to a proposed transferee who is of good moral character and whose business experience and aptitude, financial resources, and other qualifications meet CITY WIDE's then-current standards, so long as Franchisee is in full compliance with this Agreement at the time of the proposed Transfer.

- 13.3 Transfer by Franchisee Resulting in No Loss of Control. Notwithstanding Section 13.2, if Franchisee or any Affiliated Company is a corporation, the terms and conditions of this Section 13 will not be deemed to apply to any Transfer of the voting stock of, or other ownership interest in, Franchisee or such Affiliated Company, which would not, alone or together with other related or unrelated, previous, simultaneous or proposed Transfers, result in a loss of Control (as defined below) of Franchisee or an Affiliated Company by the persons and/or entities listed on the Acknowledgment Regarding Ownership attached to this Agreement as **Attachment G**.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 48

On what factor do the renewal conditions for Dauntless' franchise with City Wide depend?

Accepted Answer

*Dauntless Enterprises, Inc. and Kenneth Ayers v. City Wide Franchise Company, Inc.* (United States District Court for the District of Kansas, Case No. 2:23-cv-02273, filed June 16, 2023). Dauntless Enterprises, Inc., a CITY WIDE franchisee ("Dauntless"), and Kenneth Ayers, its owner ("Ayers"), filed this suit against CITY WIDE seeking a preliminary injunction in connection with the expiration of Dauntless' franchise agreement. Plaintiffs alleged that Dauntless satisfied each of the renewal conditions set forth in the franchise agreement with CITY WIDE and was therefore entitled to a 10-year renewal term of the franchise agreement. CITY WIDE disagreed that Dauntless satisfied all renewal conditions (although CITY WIDE had agreed provide a step-up renewal if Dauntless met certain financial and operational milestones). In their Complaint, plaintiffs alleged breach of contract against CITY WIDE and further sought to enjoin CITY WIDE from: (i) refusing to renew Dauntless' franchise agreement and (ii) terminating the franchise agreement upon the expiration of the initial 15-year term on June 19, 2023, pending a final ruling on plaintiffs' claims in arbitration. CITY WIDE opposed plaintiff's motion for preliminary injunction. On or around June 22, 2023, Dauntless and Ayers filed a demand for arbitration alleging breach of contract and breach of the covenant of good faith and fair dealing, seeking to require CITY WIDE to specifically perform the franchise agreement by entering into a new franchise agreement for a 10-year term. The parties settled all claims on July 7, 2023. Under a definitive settlement agreement dated July 28, 2023, the parties extended the initial term of the franchise agreement through December 31, 2026 (the "2026 Calendar Year") and provided Dauntless with the option to obtain a successor term from January 1, 2027, through April 3, 2033, if Dauntless satisfies certain renewal conditions. The renewal conditions vary depending on the amount of Gross Sales that Dauntless will achieve in the 2026 Calendar Year. Pursuant to the settlement agreement, Dauntless also agreed to retain at least four sales executives throughout the term of the franchise agreement, including any successor term. On August 1, 2023, the arbitration and federal court case were both dismissed with prejudice.

Source: Item 3 — LITIGATION (FDD page 14)

Question 49

What factors determine the arbitration or mediation site for a City Wide franchise purchased in Washington?

Accepted Answer

- 3. **Site of Arbitration, Mediation, and/or Litigation.** In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon a the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of the arbitration or mediation.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 50

Does the City Wide Franchise Agreement address the franchisee's use of the Marks after the termination of the franchise agreement?

Accepted Answer

All usage of the Marks by you and any goodwill established thereby will inure to the exclusive benefit of CITY WIDE and its Licensor. You are prohibited from contesting the validity or ownership of any of the Marks or assisting any other person in contesting the validity or ownership of any Marks during the term of the Franchise Agreement or at any time thereafter.

Source: Item 13 — TRADEMARKS (FDD pages 39–41)

Question 51

Does the City Wide franchise agreement contain provisions that permit the franchisor to repurchase the franchisee's business for any reason during the term of the franchise agreement without the franchisee's consent?

Accepted Answer

, costs, expenses, damages, or liabilities were actually or allegedly caused wholly or in part through the negligence of CITY WIDE or any of its agents or employees or resulted from any strict liability imposed on CITY WIDE or any of its agents or employees. All such indemnification will survive termination of this Agreement.
- 19.4 CITY WIDE will not, by virtue of any approvals, advice or services provided to Franchisee, assume responsibility or liability to Franchisee or any third parties to which CITY WIDE would not otherwise be subject.

#### **SECTION 20. Franchisor's Right to Purchase Business/Right of First Refusal**

- 20.1 Upon termination or expiration of this Agreement, CITY WIDE will have an option, but not an obligation, to purchase from Franchisee all or any assets of the Franchised Business, including, without limitation all supplies, equipment, advertising materials, and other indicia bearing CITY WIDE's Marks, at fair market value. CITY WIDE may exercise this option ("**Option to Purchase**") by giving Franchisee written notice within sixty (60) calendar days after such termination. If the parties cannot agree on fair market value within a reasonable time, an independent appraiser acceptable to Franchisee will be designated by CITY WIDE, whose determination will be binding. If CITY WIDE elects to exercise any Option to Purchase as provided, it will have the right to set off all amounts due from Franchisee under this Agreement, and the cost of the appraisal, if any, against any payment. CITY WIDE shall have up to twelve (12) months to pay the entirety of the agreed upon purchase price, upon its exercise of its Option to Purchase the business contained herein. CITY WIDE must pay at fifty percent (50%) of the purchase price at the time of exercising its Option to Purchase to defer payment of the remainder over a six (6) month period.
- 20.2 If Franchisee or its owners propose to sell the Franchised Business (or its assets) or part or all of the ownership of Franchisee, Franchisee or its owners will deliver a bona fide, executed written offer to purchase same to CITY WIDE, who will, for a period of sixty (60) days from the date of delivery of such offer, have the right, but not the obligation, exercisable by written notice to Franchisee or its owners, to purchase the Franchised Business (or its assets) or such ownership for the price and payment terms contained in such bona fide offer, provided that CITY WIDE may substitute cash for any form of payment proposed in such offer and may require Franchisee to enter into an asset purchase agreement or similar agreement containing the terms and conditions that are customary for such a transaction ("**Right of First Refusal**"). If CITY WIDE does not exercise its Right of First Refusal, the offer may be accepted by Franchisee or its owners, subject to the prior written approval of CITY WIDE, as provided in Section 22 of

this Agreement; provided that if such offer is not so accepted by Franchisee within one hundred twenty (120) calendar days of the date of such offer, or if the offer is modified in any material way from the original bona fide offer presented to CITY WIDE, CITY WIDE will again have this Right of First Refusal. Should a transferee franchisee assume the rights and obligations under this Agreement, such transferee franchisee will likewise be subject to CITY WIDE's Right of First Refusal under the terms and conditions as set forth in this Agreement.

#### **SECTION 21. Operation In the Event Of Absence, Incapacity Or Death**

In order to prevent any interruption of the operation of the Franchised Business which would cause harm to or depreciate its value, in the event that Franchisee is absent, dies or becomes incapacitated as defined in this Agreement, and in the sole and absolute judgment of CITY WIDE is not able to operate the Franchised Business, Franchisee authorizes CITY WIDE to operate the Franchised Business for so long as CITY WIDE deems necessary and practical, and without waiver of any other rights or remedies CITY WIDE may have under this Agreement;

Source: Item 22 — CONTRACTS (FDD page 65)

Question 52

In the City Wide franchise agreement, what documents are superseded by the state law addendum if there are inconsistencies?

Accepted Answer

| The following modifications are to the CITY WIDE FRANCHISE COMPANY, INC. Franchise                        |
|-----------------------------------------------------------------------------------------------------------|
| Disclosure Document and may supersede, to the extent then required by valid applicable state law, certain |
| portions of the Franchise Agreement dated, 20 , and Statement of Franchisee.                              |

Source: Item 22 — CONTRACTS (FDD page 65)

Question 53

What does the City Wide Franchise Disclosure Document say about the enforceability of termination clauses in Virginia, according to Section 13.1-564 of the Virginia Retail Franchising Act?

Accepted Answer

In recognition of the restrictions contained in Section 13.1-564 of the Virginia Retail Franchising Act, the Franchise Disclosure Document for use in the Commonwealth of Virginia shall be amended as follows:

ITEM 17(h) is amended by the addition of the following language:

"Pursuant to Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in the franchise agreement does not constitute "reasonable cause", as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable."

Source: Item 22 — CONTRACTS (FDD page 65)

Question 54

Is a City Wide franchisee required to maintain a general contractor's license?

Accepted Answer

payment and performance of each and every undertaking, fee, agreement, duty, and covenant of Franchisee set forth in this Agreement, which guaranty must be executed by the principals, owners, directors, or stockholders of Franchisee, as the case may be, or by such other persons or entities as CITY WIDE may require. Additionally, spouses or domestic partners of principals, owners or stockholders will be required to provide a conditional guaranty of payment in the form attached to this Agreement as **Attachment A-2**.
- 12.3 Franchisee covenants that Franchisee has applied for, secured, and agrees to always maintain during the Term of this Agreement a general contractor's license, if required by state or local law, and any other permits, licenses, and/or approvals which may be required to operate Franchisee's Franchised Business within the Designated Territory.
- 12.4 Each of the foregoing covenants and the covenants of the Non-Compete Agreement will be construed as independent of any other covenant or provision of this Agreement. Franchisee and all guarantors expressly agree that the existence of any claim they may have against CITY WIDE, whether arising from this Agreement, will not constitute a defense to the enforcement by CITY WIDE of the covenants in this Section.
- 12.5 CITY WIDE has the right to require Franchisee to execute similar covenants, in a form satisfactory to CITY WIDE, with all of Franchisee's personnel who perform managerial or supervisory functions and all personnel who receive training from CITY WIDE.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 55

Is a City Wide franchisee required to maintain a general contractor's license, and under what conditions?

Accepted Answer

payment and performance of each and every undertaking, fee, agreement, duty, and covenant of Franchisee set forth in this Agreement, which guaranty must be executed by the principals, owners, directors, or stockholders of Franchisee, as the case may be, or by such other persons or entities as CITY WIDE may require. Additionally, spouses or domestic partners of principals, owners or stockholders will be required to provide a conditional guaranty of payment in the form attached to this Agreement as **Attachment A-2**.
- 12.3 Franchisee covenants that Franchisee has applied for, secured, and agrees to always maintain during the Term of this Agreement a general contractor's license, if required by state or local law, and any other permits, licenses, and/or approvals which may be required to operate Franchisee's Franchised Business within the Designated Territory.
- 12.4 Each of the foregoing covenants and the covenants of the Non-Compete Agreement will be construed as independent of any other covenant or provision of this Agreement. Franchisee and all guarantors expressly agree that the existence of any claim they may have against CITY WIDE, whether arising from this Agreement, will not constitute a defense to the enforcement by CITY WIDE of the covenants in this Section.
- 12.5 CITY WIDE has the right to require Franchisee to execute similar covenants, in a form satisfactory to CITY WIDE, with all of Franchisee's personnel who perform managerial or supervisory functions and all personnel who receive training from CITY WIDE.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 56

Can a City Wide franchisee terminate the franchise agreement, and if so, under what grounds?

Accepted Answer

At any time after the Initial Term, either Party may terminate this Agreement upon providing ninety (90) days written notice to the other Party, with the termination effective on the ninetieth day from date of delivery of the written notice, and acceptance by the Parties.

Franchisee hereby acknowledges and accepts that any bonuses and/or commissions earned during the Term of the Agreement are still owed and payable pursuant to Exhibit B.

City Wide will have the right, without incurring any liability to Franchisee, by notice in writing effective when given, to terminate this Agreement in the event the Franchise Agreement is terminated by City Wide.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 57

Is a City Wide franchisee's Monthly Gross Sales likely to be lower in its first year of business?

Accepted Answer

- (4) The Monthly Gross Sales and Monthly Net Royalties figures are derived from the aggregate sales of CITY WIDE services and supplies, prepared from sales records and reports, as generated by CITY WIDE required accounting software, and submitted to CITY WIDE by the CITY WIDE franchisees satisfying the Quartile Reporting Criteria. A franchisee's Monthly Gross Sales is likely to be lower in its first year of business.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 48–58)

Question 58

Is the franchisee's right to use City Wide's Marks dependent on any other agreements besides the Franchise Agreement?

Accepted Answer

Your use of the trademarks, service marks, or commercial symbols of CITY WIDE in any advertising or in any form of promotion shall conform to the guidelines stated in Section 5 of the Franchise Agreement, Attachment D to the Franchise Agreement, and the Operating Manual, and as that Attachment D to the Franchise Agreement is periodically modified in the Operating Manual.

Source: Item 13 — TRADEMARKS (FDD pages 39–41)

Question 59

Is General Liability Umbrella insurance required for a City Wide franchise, and under what conditions?

Accepted Answer

nnualized basis with the Support Center, ahead of coverage renewal)

Recommended (required if client requires it):

- General Liability Umbrella \$5,000,000 (recommended, required if client requires it)
- Employee Honesty Bond \$50,000 (recommended, required if client requires it)
- Errors and Omissions insurance (recommended)

If you provide service to a National Account, you must carry the types and coverages of insurance required by each National Account Contract and you are solely responsible to ensure that any subcontractors

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 24–28)

Question 60

What happens if a City Wide franchisee elects a higher level of accounting services?

Accepted Answer

In consideration of the foregoing premises and the mutual covenants and agreements contained herein, the Parties hereby agree as follows:

#### **AGREEMENT**

- 1. Services. Subject to the terms of this Agreement and based on the information provided to City Wide by Franchisee, City Wide agrees to provide the accounting and financial services to Franchisee, pursuant to the selected accounting package and/or selected accounting services on the attached Accounting and Financial Services Packages ("**Exhibit A**") attached hereto and made a part hereof (collectively, "**Services**"). The provision of Services by City Wide will in no way imply or be interpretated that City Wide is in any way responsible for Franchisee's debts, obligations and other liabilities. It is understood by Franchisee that, in the event there is not sufficient cash flow to meet Franchisee's financial obligations, City Wide is in no way obligated to contribute funds to Franchisee's account nor pay Franchisee's financial obligations.
  - 2. Initial Term. The Term of this Agreement shall be one of the following three options:
    - a. New. Thirty (30) days prior to the Franchised Business opens for business to the general public;
    - b. Existing. Thirty (30) days after receipt of three (3) complete billing cycles, if the Franchised Business is already open prior to the Effective Date; or
    - c. Interim. As agreed to and described in the attached Exhibit B Scope of Work,

All the above Terms will continue for a period of twelve (12) months, unless otherwise agreed to in writing among the Parties, or terminated sooner in accordance with Section 3 of this Agreement ("**Initial Term**"). This Agreement will renew automatically for a period of six (6) months (collectively, each six month term, "**Successor Term**"), unless terminated in accordance with Section 3 of this Agreement.

- 3.

Termination.

Unless otherwise agreed to by the Parties, a t any time after the Initial Term, either Partymay terminate this Agreement upon providing ninety (90) days written notice to the other Party, with the termination effective on the ninetieth day from date of delivery of the written notice.

City Wide will have the right, without incurring any liability to Franchisee, by notice in writing effective when given, to terminate this Agreement in the event the Franchise Agreement is terminated by City Wide.

- 4.

Pricing.

The fee structure ("**Accounting Services Fee**") for the Services is as set forth on Exhibit A.

- 5.

Independent Contractor.

It is understood and agreed by Franchisee that this Agreement and the provision of Services hereunder by City Wide does not create a fiduciary relationship between them, that the Parties will be independent contractors, and that nothing in this Agreement is intended to make either party a general or special agent, joint venture, partner or employee of the other for any purpose.

- 6.

Process.

Franchisee will be solely responsible for providing City Wide with all requested and required documents, data, contracts, account information and access and other information and access reasonably requested by City Wide so that City Wide can provide the Services to Franchisee.

City Wide will not be responsible for the production of inaccurate information, records and billings or any other financial reports if the data submitted by Franchisee is inaccurate.

- 7.

Indemnification.

Franchisee will indemnify, defend and hold harmless City Wide and its past, present and future officers, directors, agents, attorneys, employees, shareholders, successors, assigns and affiliates (collectively "**City Wide Indemnities**") from and against any and all expenses, damages, taxes, claims, suits, losses, actions, judgments, liabilities and costs, including City Wide Indemnities' reasonable attorney's fees and in-house counsel fees, arising out of or based on any claim, action, judicial proceeding, administrative proceeding, personal injury or damage to real or personal property brought or threatened in connection with City Wide's provision of Services, or otherwise related to or arising out of any breach of this Agreement by City Wide.

Source: Item 22 — CONTRACTS (FDD page 65)

Question 61

What happens if a City Wide franchisee is in material breach of the Franchise Agreement regarding their Designated Territory?

Accepted Answer

al Revenue Per Capita Growth by calculating the average revenues generated by your CITY WIDE Franchised Business in the immediately preceding two (2) years of operations. If you fail to satisfy the Annual Revenue Per Capita Growth requirement in any twenty-four month period, it will be deemed a material breach of the Franchise Agreement, and CITY WIDE will then have the right to reduce the size of your Designated Territory, grant additional franchises within the Designated Territory or to terminate your Franchise Agreement, however, you will have a period not to exceed one (1) year to cure such breach.

These Annual Revenue Per Capita Growth figures are not financial performance representations for your CITY WIDE Franchised Business. Other than as provided in ITEM 19, CITY WIDE does not furnish or authorize its salespersons to furnish any oral or written information concerning the actual or potential sales, costs, income or profits of a CITY WIDE Franchised Business. If your Franchise Agreement is renewed, your Annual Revenue Per Capita Growth must increase by the per capita growth as stated in the Manual and in the then-current Franchise Disclosure Document, generated in the immediately preceding two (2) years of operations.

Source: Item 12 — TERRITORY (FDD pages 36–39)

Question 62

What happens if the City Wide franchisee does not meet the Annual Revenue Per Capita Growth requirement?

Accepted Answer

Term or any Successor Term as outlined in the Manual. Franchisee shall not change the Location without CITY WIDE's approval. Franchisee shall give CITY WIDE at least thirty (30) days prior written notice of any such change and CITY WIDE shall have thirty (30) days within which to approve such Location and the proposed décor and signage. If CITY WIDE does not disapprove of such Location, décor or signage within such thirty (30) day period, same shall be deemed disapproved.
- 6.5 To retain rights to the Designated Territory, Franchisee must meet the annual revenue per capita growth ("**Annual Revenue Per Capita Growth**") in every year in the Term of the Agreement, as published on uscensus.gov. Specifically, Franchisee will be required to grow the gross revenues generated by the Franchised Business to no less than \$0.20 per person per year. Franchisees must meet this requirement each year; however, CITY WIDE will measure this requirement using a three-year rolling average. CITY WIDE will measure Franchisee's Annual Revenue Per Capita Growth by calculating the average revenues generated by Franchisee's Franchised Business in the preceding two (2) years of operations. Each year thereafter, CITY WIDE will measure Franchisee's Annual Revenue Per Capita Growth by calculating the average revenues generated by Franchisee's Franchised Business in the immediately preceding two (2) years of operations. Each year thereafter, CITY WIDE will measure Franchisee's Annual Revenue Per Capita Growth by calculating the average revenues generated by Franchisee's Franchised Business in the immediately prec

Source: Item 22 — CONTRACTS (FDD page 65)

Question 63

What happens if a City Wide franchisee meets the Annual Revenue Per Capita Growth requirement?

Accepted Answer

er franchisees, from outlets that CITY WIDE or its affiliates own, or from other channels of distribution or competitive brands that CITY WIDE or its affiliates control.

CITY WIDE will not operate or license others to operate a CITY WIDE Franchised Business using the Marks within your Designated Territory unless you do not meet the annual revenue per capita ("**Annual Revenue Per Capita Growth**") in every year during the term of your Franchise Agreement.

Specifically, you will be required to grow the gross revenues generated by your CITY WIDE Franchised Business to no less than \$0.20 per person per year in your Designated Territory. The rate of \$0.20 is the current rate. On an annual basis beginning of fiscal year any metric that we use to measure the Annual Revenue Per Capita Growth may be adjusted based upon the increase in the Consumer Price Index as currently measured by the Index as defined below, but not to exceed 3%. For purposes of this section, "Index" shall mean (i) the increase in the Consumer Price Index for all Urban Consumers, U.S. City Average (1982-84 = 100) published by

Source: Item 12 — TERRITORY (FDD pages 36–39)

Question 64

What happens if the 'Open Date' is otherwise agreed to by the Parties for City Wide?

Accepted Answer

| This Business Development Center Agreement ("Agreement") dated is entered into by and between City Wide Franchise Company, Inc. ("City Wide") and ("Franchisee")                                                                                                                                                                                                           |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (City Wide and Franchisee, collectively "Parties" or individually "Party"). |
| RECITALS |
| A. |
| City |
| Wide |
| and |
| Franchisee |
| are |
| parties |
| to |
| that |
| certain |
| Franchise |
| Agreement |
| dated |
| ("Franchise |
| Agreement"),[as amended] |
| pursuant |
| to |
| which |
| Franchisee |
| is |
| granted |
| the |
| right |
| to |
| operate |
| a |
| City |
| Wide franchise in the Designated Territory, as defined in the Franchise Agreement ("Franchised Business"). |
| B. |
| Franchisee desires to enlist the Services (defined below) of City Wide's Business Development |
| Center for the purpose of |
| assisting in |
| the |
| prospecting and developing of local City |
| Wide clientele. Services will be |
| provided starting as of the date the Franchised Business opens for business ("Open Date" or as otherwise agreed |
| to by the Parties) hereinafter the "Effective Date". |

Source: Item 22 — CONTRACTS (FDD page 65)

City_Wide 2025 FDD FAQ