What constitutes a crime that could lead to immediate termination of a City Wide franchise agreement?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- 23.2 Breach of Covenants by Franchisee.
Franchisee acknowledges and agrees that breach of the covenants made by Franchisee under this Agreement would cause irreparable injury to CITY WIDE which could not sufficiently be remedied by monetary damages, and therefore that CITY WIDE will be entitled to obtain, without bond, such equitable relief as declarations; temporary, preliminary, and permanent injunctions; and orders of specific performance for the following purposes, among any other purposes: to enforce the covenants made by Franchisee and any guarantors thereof pursuant to this Agreement, including but not limited to, those relating to Franchisee's use of the Marks and the non-competition covenants contained in Sections 5 and 12 of this Agreement, to enforce Franchisee's obligations upon termination or expiration of this Agreement; to prevent assignment of the Franchise or ownership interests of Franchisee in the business without the prior written consent of CITY WIDE, to prohibit any act or omission by Franchisee or Franchisee's employees that constitutes a breach of any term or provision of this Agreement or a violation of any applicable law or regulation; to prohibit any act or omission that is dishonest or misleading to prospective or current customers of businesses operated under the System; to prohibit any act or omission that constitutes a danger to other franchisees, employees, customers, or the public; or to prohibit any act or omission that may tend to impair the goodwill associated with the Marks.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
Based on the 2025 City Wide Franchise Disclosure Document, there is no explicit mention of specific criminal acts that would lead to immediate termination. However, Section 23.2 indicates that City Wide can seek equitable relief, including injunctions, to prohibit any act or omission by a franchisee or their employees that violates any applicable law or regulation, or any act or omission that is dishonest or misleading to prospective or current customers. While this section does not explicitly state 'immediate termination,' it does provide City Wide with broad powers to act against franchisee behavior that is unlawful or harmful to the brand's reputation.
Item 22 outlines various events of default that can lead to termination of the franchise agreement, but these typically require a notice to cure, allowing the franchisee a period to rectify the issue. Some defaults that could potentially arise from criminal behavior include knowingly maintaining false books or records, or breaching any covenant, agreement, obligation, term, warranty, condition, or certification contained in the agreement. However, the FDD does not specify which, if any, of these defaults would trigger immediate termination without an opportunity to cure.
Therefore, while the FDD does not directly address criminal acts leading to immediate termination, City Wide retains significant power to enforce legal and ethical conduct through various means, including potential termination after failure to cure a default. A prospective franchisee should seek clarification from City Wide regarding what specific actions or criminal convictions would trigger immediate termination without a cure period.