Can a City Wide franchisee assign their rights to the franchise agreement without City Wide's consent?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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
Agreement and to allow such restrictions to be enforceable. Such legend will appear in substantially the following form:
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, a franchisee cannot freely transfer their rights and obligations under the franchise agreement without prior written consent from City Wide. City Wide maintains that the rights and duties outlined in the agreement are specific to the franchisee, and the franchise was granted based on the franchisee's business skills and financial capacity.
This restriction extends not only to the franchisee but also to any affiliated companies or owners with interests in the franchise. Any attempt to give away, sell, assign, pledge, lease, sublease, devise, or otherwise transfer any portion of the agreement, the franchised business, or any ownership interests requires City Wide's prior written consent. This includes transfers made directly, by operation of law, or in any other manner.
To ensure compliance with these transfer restrictions, City Wide requires that all share or stock certificates of any corporate franchisee and any affiliated company contain a legend that provides notice of the transfer restrictions. This legend must be sufficient under applicable law to make the restrictions enforceable. This requirement protects City Wide's interests by ensuring that any potential new franchisee or owner meets their standards and requirements.