What constitutes 'good cause' for City Wide to terminate a franchise and repurchase the business?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
ituted against Franchisee and not dismissed within ninety (90) days; or
- 14.1.3 If any of Franchisee's real or personal property will be sold after levy upon it by any sheriff, marshal, or constable; or
- 14.1.4 If Franchisee or any officer, director, stockholder, or general partner of Franchisee is convicted of or admits to the commission of any felony or crime involving moral turpitude or any other crime that CITY WIDE reasonably determines could have an adverse effect on the Franchised Business, the System, or the Marks; or
- 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:
- 14.2.1 If Franchisee ceases to operate the Franchised Business in the Designated Territory, or otherwise forfeit the right to do or transact business in the jurisdiction where the Franchised Business is located;
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, City Wide can terminate the franchise agreement under several conditions. These include instances where the franchisee knowingly maintains false records, makes materially false statements to City Wide, or fails to satisfactorily complete the mandatory training program. Unsatisfactory completion of training is determined at City Wide's sole discretion after a face-to-face interview and evaluation.
Further reasons for termination include committing two or more acts of default within a 12-month period (with an exception for defaults related to annual revenue per capita growth), failing to properly operate and equip the franchised business as outlined in the agreement, or being party to another City Wide franchise agreement that City Wide has terminated (unless due to failure to meet growth requirements). Abandoning the business by failing to operate during normal business hours for seven or more days without prior written consent also constitutes grounds for termination.
In the event of an uncured breach by the franchisee, City Wide has the right to terminate the agreement, causing the franchisee to forfeit any rights to Royalty Rebates. Upon termination or expiration of the agreement, City Wide has the option to purchase the assets of the franchised business at fair market value, with a process for independent appraisal if the parties cannot agree on the value. City Wide has up to 12 months to pay the purchase price, with 50% due at the time of exercising the purchase option.