What costs are included in the Independent Labor Cost for City Wide franchisees?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- (5) Independent Labor Cost as a Percentage of Total Annual Revenues is calculated by deducting the cost of independent labor ("Independent Labor Cost") incurred on an annual basis from total Annual Revenue where an Independent Contractor, generally under contract, for the performance of such work. Revenue generated by each CITY WIDE franchisee and reported by managers or owners of each of the CITY WIDE franchisees satisfying the Quartile Reporting Criteria. Independent Labor Cost is comprised of all costs and expenses paid by CITY WIDE franchisees that satisfied the Quartile Reporting Criteria to outside vendors who performed services for customers of CITY WIDE franchisees. CITY WIDE does not know of an instance, nor does CITY WIDE have reason to believe, that any manager or owner would overstate or understate his or her Independent Labor Cost in his or her report. However, neither the Annual Revenue associated with Independent Contractors, nor the annual Independent Labor Cost figures have been audited and CITY WIDE has not independently verified these average monthly sales or cost numbers.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 48–58)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the Independent Labor Cost includes all costs and expenses paid by City Wide franchisees to outside vendors who perform services for customers. This cost is deducted from the total annual revenue to calculate the Independent Labor Cost as a Percentage of Total Annual Revenues. The vendors are generally under contract for the performance of such work.
This means that franchisees need to account for all payments made to independent contractors when calculating their financial performance. These costs are a significant factor in determining the franchisee's gross margin, as they are deducted along with the additional cost of goods sold from the total annual revenue.
City Wide uses this Independent Labor Cost to calculate financial performance representations in Item 19 of the FDD. While City Wide does not believe franchisees would misreport these costs, the FDD notes that the figures have not been audited and City Wide has not independently verified these numbers.