What is the deadline for City Wide to exercise its Option to Purchase after termination or expiration of the franchise agreement?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- 20.1 Upon termination or expiration of this Agreement, CITY WIDE will have an option, but not an obligation, to purchase from Franchisee all or any assets of the Franchised Business, including, without limitation all supplies, equipment, advertising materials, and other indicia bearing CITY WIDE's Marks, at fair market value. CITY WIDE may exercise this option ("Option to Purchase") by giving Franchisee written notice within sixty (60) calendar days after such termination. If the parties cannot agree on fair market value within a reasonable time, an independent appraiser acceptable to Franchisee will be designated by CITY WIDE, whose determination will be binding. If CITY WIDE elects to exercise any Option to Purchase as provided, it will have the right to set off all amounts due from Franchisee under this Agreement, and the cost of the appraisal, if any, against any payment. CITY WIDE shall have up to twelve (12) months to pay the entirety of the agreed upon purchase price, upon its exercise of its Option to Purchase the business contained herein. CITY WIDE must pay at fifty percent (50%) of the purchase price at the time of exercising its Option to Purchase to defer payment of the remainder over a six (6) month period.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, upon the termination or expiration of the franchise agreement, City Wide has the option to purchase the assets of the franchised business. To exercise this option, City Wide must provide written notice to the franchisee within sixty (60) calendar days after the termination or expiration date.
This means that if a franchisee's agreement ends, either through its natural expiration or due to termination, City Wide has a limited time frame to decide if they want to buy the business's assets. This includes items like supplies, equipment, and advertising materials that bear City Wide's trademarks. The price for these assets will be the fair market value, and if the franchisee and City Wide can't agree on that value, an independent appraiser will determine it.
City Wide also has the right to offset any amounts the franchisee owes them under the agreement, as well as the cost of the appraisal, against the purchase price. City Wide has up to twelve (12) months to pay the agreed upon purchase price, but must pay fifty percent (50%) of the purchase price at the time of exercising its Option to Purchase to defer payment of the remainder over a six (6) month period. This could impact the franchisee's ability to quickly liquidate their assets and move on to other ventures, as they may have to wait for City Wide to complete the purchase and payment.