After the City Wide franchise terminates or expires, what geographic areas are included in the non-competition covenant?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| transferee acceptable to CITY WIDE, subject to compliance with the transfer restrictions above; provided, however, that the Survivor will, throughout such period, fulfill all duties of Franchisee under this Agreement. The 6 months will be extended by up to 60 days to account for CITY WIDE's right of first refusal under described above. Failure to so dispose of the interest within such time will constitute a material breach of the Franchise Agreement. | ||
| q. Non-competition covenants during the term of the franchise | Section 12; Attachment F | You cannot be involved in a competing business. |
| r. Non-competition covenants after the franchise is terminated or expires | Section 12; Attachment F | You cannot be involved in a competing business in your Designated Territory for 2 years after the Franchise Agreement terminates or expires, within the Standard Metropolitan Statistical Area (SMSA) where the Franchised Business Location is located, or within 150 miles of any other CITY WIDE location, whether franchised or operated by CITY WIDE or one of its franchisees or affiliates. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 44–47)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, if the Franchise Agreement is terminated or expires, the franchisee is subject to a non-competition covenant. This means the franchisee cannot be involved in a competing business for a period of two years.
The geographic scope of this restriction includes three specific areas. First, the franchisee cannot operate a competing business within their Designated Territory. Second, they are restricted within the Standard Metropolitan Statistical Area (SMSA) where the Franchised Business Location is situated. Finally, the non-compete extends to within 150 miles of any other City Wide location. This includes locations that are franchised, operated by City Wide itself, or run by its franchisees or affiliates.
This non-competition covenant is a significant restriction that a potential City Wide franchisee should carefully consider. It limits their ability to engage in similar business ventures in a fairly broad geographic area for two years after the franchise agreement ends. Franchisees should evaluate whether this restriction aligns with their long-term business goals and potential exit strategies.