What action can City Wide take if a franchisee fails to comply with staffing requirements?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
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. Franchisee agrees to complete and submit to CITY WIDE on an annual basis a budget and strategic business plan before the end of Franchisee's fiscal year via CITY WIDE's budgeting platform. In the event CITY WIDE exercises its right in 7.15(a) above, the portion of the Designated Territory that is no longer part of the Designated Territory ("Eliminated Portion") may be granted by CITY WIDE to another franchisee to develop, own and operate a franchised business. If CITY WIDE grants the Eliminated Portion to another franchisee, Franchisee acknowledges and agrees that Franchisee's duties and obligations under this Agreement relating to operating the Franchised Business in the remaining part of the Designated Territory will continue in full force and effect so long as this Agreement is in effect. Notwithstanding the above, CITY WIDE will provide Franchisee with a period not to exceed one (1) year to cure the breach in 7.15(a).
Franchisee acknowledges and agrees there exists a direct correlation between sales staffing and the financial success of a Franchised Business. Accordingly, Franchisee is required to meet the minimum staffing levels as set forth in the Operating Manual.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD page 43)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, franchisees must adhere to the minimum staffing requirements outlined in the Operating Manual. City Wide considers compliance with staffing requirements a material term of the Franchise Agreement.
If a City Wide franchisee fails to meet these staffing requirements, it constitutes a material default of the Franchise Agreement. In such cases, City Wide has the right to terminate the Franchise Agreement. Alternatively, instead of terminating the agreement, City Wide can take other actions. These actions include reducing the franchisee's designated territory size, reducing the number of field visits provided to the franchisee, requiring the franchisee to attend additional training at the franchisee's expense, prohibiting the franchisee from attending any annual conference, convention, or training session, deeming the franchisee ineligible for any awards, and reducing or eliminating the level of support and services provided to the franchisee.
City Wide will provide the franchisee a period not to exceed one year to cure the breach related to the territory size reduction. The portion of the designated territory that is no longer part of the designated territory may be granted to another franchisee to develop, own, and operate a franchised business. The franchisee's duties and obligations under the agreement relating to operating the franchised business in the remaining part of the designated territory will continue in full force and effect so long as the agreement is in effect.
Prospective franchisees should carefully review the Operating Manual to understand the specific staffing requirements and the potential consequences of non-compliance. Understanding these requirements is crucial for maintaining a successful City Wide franchise and avoiding potential penalties or termination of the agreement.