Are City Wide's contributions to the 401(k) profit-sharing plan mandatory or discretionary?

According to City Wide's 2025 Franchise Disclosure Document, the company's contributions to its 401(k) profit-sharing plan are discretionary. This means that City Wide decides annually whether or not to contribute to the plan, and the amount of any contribution is also determined at the company's discretion. The plan covers substantially all employees of City Wide and its related entities under common ownership.

For a prospective City Wide franchisee, this information is relevant in understanding the overall financial health and employee benefits structure of the company. While franchisees are not direct employees, the stability and attractiveness of employee benefits can impact the quality and retention of staff at the corporate level, which in turn affects the support and services available to franchisees.

The FDD also provides information on the amounts City Wide contributed to the plan in previous years. Contributions to the plan were approximately $215,000 in 2024, $176,000 in 2023, and $138,000 in 2022. These figures give some historical context, but as the contributions are discretionary, future contributions could vary significantly. A potential franchisee should recognize that past contributions are not a guarantee of future contributions.

It's important for prospective franchisees to consider the implications of discretionary contributions when evaluating the long-term stability and attractiveness of City Wide as a franchise system. While a discretionary plan allows City Wide flexibility, it also introduces uncertainty. Franchisees may want to inquire further about City Wide's philosophy and historical practices regarding the 401(k) plan to better assess potential future contributions.