What is an 'Affiliated Company' in the context of City Wide's franchise agreement?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges that CITY WIDE is the licensee of the Marks found in Attachment C to this Agreement**.** Franchisee further acknowledges that CITY WIDE has disclosed fully to Franchisee that the Marks licensed hereunder are owned by CITY WIDE FRANCHISE HOLDING COMPANY, INC., an affiliate (See Section 13.2) of CITY WIDE. Franchisee additionally acknowledges that CITY WIDE has disclosed fully to Franchisee that CITY WIDE has the exclusive right throughout the United States, Canada and Mexico, under its License Agreement with CITY WIDE FRANCHISE HOLDING COMPANY, INC., to sub-license the use of the Marks for use as outlined in this Agreement.
Top-Down Accounts and Preferred Vendor Accounts are serviced either by CITY WIDE'S other franchisees or by an affiliate of CITY WIDE, Arete Facility Management, LLC ("Arete").
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).
2.2.8 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.
CITY WIDE will return to Franchisee the Initial Franchise Fee paid by Franchisee to CITY WIDE minus the training and other expenses CITY WIDE incurred, but such expenses will be no more than Ten Thousand Dollars ($10,000). When CITY WIDE has returned this amount to Franchisee, Franchisee will fully and forever release CITY WIDE and its affiliates, subsidiaries, directors, officers and agents from any claims or causes of action Franchisee may have under this Agreement and Franchisee will have no further right, title or interest in the Marks, Software, or the System.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the term 'affiliate' is used in several contexts but not explicitly defined. One instance refers to City Wide Franchise Holding Company, Inc. as an affiliate of City Wide. Another reference identifies Arete Facility Management, LLC ('Arete') as an affiliate of City Wide that services Top-Down Accounts and Preferred Vendor Accounts generated through City Wide's National Business Development Program.
Several clauses in the franchise agreement also mention 'subsidiaries or affiliates' in relation to the franchisee's obligations. For example, a franchisee must not be in default of any agreement with City Wide or its subsidiaries or affiliates. Franchisees must also satisfy all monetary obligations owed to City Wide and its subsidiaries and affiliates. These clauses suggest that City Wide considers its affiliated companies as entities with which the franchisee must maintain good standing to remain in compliance with the franchise agreement.
Furthermore, in the context of training, if City Wide terminates the agreement due to the franchisee's inability to complete the initial training program satisfactorily, the franchisee fully and forever releases City Wide and its affiliates, subsidiaries, directors, officers, and agents from any claims or causes of action. This indicates that City Wide's affiliates are closely tied to the operations and potential liabilities of the franchisor.
While the FDD does not provide a precise legal definition of 'affiliated company,' it is clear that these entities have significant relationships with City Wide and can impact the franchisee's rights, responsibilities, and business operations. A prospective franchisee should seek clarification from City Wide regarding the specific entities considered affiliates and the nature of their relationships to fully understand the implications for their franchise.