Does City Wide's Franchise Agreement bind City Wide's successors and assigns?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
SECTION 13. Transfer and Assignment of Agreement
- 13.1 Transfer by CITY WIDE. This Agreement and all rights and duties hereunder may be freely assigned or transferred by CITY WIDE and will be binding upon and inure to the benefit of CITY WIDE'S successors and assigns.
- 13.2 Transfer by Franchisee. Franchisee understands and acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee and that CITY WIDE has granted the Franchise in reliance on Franchisee's business skill and financial capacity. It is important to CITY WIDE that Franchisee at all times be known to CITY WIDE and meet CITY WIDE's then-current standards and requirements. Accordingly, except pursuant to the specific terms set forth in this Agreement, neither Franchisee, nor any corporation or other entity, domestic or foreign, which has the voting power and control to elect directly or indirectly through another corporation or entity or series of other corporations or entities a majority of the board of directors of Franchisee ("Affiliated Company"), nor any person possessing an interest or holding shares of stock of any kind or nature in Franchisee or any Affiliated Company ("Owner") will be permitted, without the prior written consent of CITY WIDE, to give away, sell, assign, pledge, lease, sublease, devise, or otherwise transfer, either directly or by operation of law or in any other manner, all or any portion of this Agreement; any of Franchisee's rights or obligations under this Agreement, the Franchised Business; or any shares of stock, partnership interest, or interest of any kind or nature in Franchisee or any Affiliated Company (any such transaction being referred to hereinafter as a "Transfer"). In order to secure compliance by Franchisee with the transfer restrictions contained in this Section, all share or stock certificates of any corporate Franchisee and any Affiliated Company will at all times contain a legend sufficient under applicable law to constitute notice of the restrictions on such stock contained in this
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the Franchise Agreement is binding upon and benefits City Wide's successors and assigns. Specifically, City Wide can freely assign or transfer the agreement. This means that if City Wide were to be acquired or merge with another company, the new entity would assume City Wide's responsibilities and rights under the existing franchise agreements.
This clause protects City Wide by allowing it to transfer its obligations, while also reassuring franchisees that the terms of their agreement will remain in effect even if the company changes ownership. However, it's important to note that while City Wide can transfer the agreement, franchisees face restrictions on their ability to transfer their rights without City Wide's prior written consent.
Furthermore, any terms of the Franchise Agreement that extend beyond the termination or expiration date will remain in effect and apply to the respective successors and permitted assignees. This ensures that certain obligations, such as those related to confidentiality or non-competition, continue to bind the parties even after the agreement has ended or been transferred.