What is the effect of a transfer of a City Wide franchise if the franchisee is not in full compliance with the agreement?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
le law to constitute notice of the restrictions on such stock contained in this
Agreement and to allow such restrictions to be enforceable. Such legend will appear in substantially the following form:
| "The sale, transfer, pledge, or hypothecation of this stock is restricted | ||
|---|---|---|
| pursuant to an option, the terms of which are contained in a Franchise | ||
| Agreement dated between CITY WIDE | ||
| FRANCHISE COMPANY, INC., and" |
Any purported assignment or transfer, by operation of law or otherwise, not having the prior written consent of CITY WIDE will be null and void and will constitute a material breach of this Agreement entitling CITY WIDE, at its sole and absolute right, to immediately terminate this Agreement; provided however, that CITY WIDE will not unreasonably withhold its approval of a Transfer to a proposed transferee who is of good moral character and whose business experience and aptitude, financial resources, and other qualifications meet CITY WIDE's then-current standards, so long as Franchisee is in full compliance with this Agreement at the time of the proposed Transfer.
- 13.3 Transfer by Franchisee Resulting in No Loss of Control. Notwithstanding Section 13.2, if Franchisee or any Affiliated Company is a corporation, the terms and conditions of this Section 13 will not be deemed to apply to any Transfer of the voting stock of, or other ownership interest in, Franchisee or such Affiliated Company, which would not, alone or together with other related or unrelated, previous, simultaneous or proposed Transfers, result in a loss of Control (as defined below) of Franchisee or an Affiliated Company by the persons and/or entities listed on the Acknowledgment Regarding Ownership attached to this Agreement as Attachment G.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, any attempt to transfer the franchise without City Wide's prior written consent is considered a material breach of the agreement if the franchisee is not in full compliance. This gives City Wide the right to immediately terminate the agreement. However, City Wide will not unreasonably withhold approval of a transfer to someone of good moral character with the necessary business experience, financial resources, and qualifications, provided the franchisee is in full compliance with the agreement at the time of the proposed transfer.
To transfer a City Wide franchise, the franchisee must first pay all outstanding amounts owed to City Wide and resolve any existing breaches of the franchise agreement or any other agreements with City Wide. Additionally, the franchisee must provide City Wide with a general release, absolving them of any claims against City Wide and its affiliates. The franchisee must also adhere to all other transfer requirements outlined in the operating manual or communicated by City Wide in writing.
Prior to the completion of any transfer, City Wide may conduct an inspection of the franchise location and the franchisee's financial records. As a result of this inspection, City Wide may require the franchisee to complete necessary repairs, maintenance, or upgrades to the location before approving the transfer. City Wide may also require the franchisee to pay any additional fees discovered during the inspection. Both the franchisee and the prospective transferee must jointly request this inspection from City Wide.