Can a City Wide franchisee own or maintain a competitive business that provides similar services without written approval from City Wide?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
ATTACHMENT B TO THE FRANCHISE AGREEMENT - DESIGNATED TERRITORY
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- Franchisee covenants that during the term of this Non-Compete Agreement, except as otherwise approved in writing by CITY WIDE, Franchisee will not, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with any person, persons, partnership, or corporation:
- a. Divert or attempt to divert any business or customers of the Franchised Business to any competitor, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any act injurious or prejudicial to the goodwill associated with CITY WIDE's Marks and the System; or
- b. Own, maintain, engage in, consult with, or have any material interest in any competitive business (including any business operated by Franchisee prior to entry into the Franchise Agreement) specializing, in whole or in part, in providing the same or similar services or products or activities of any type or nature, targeted at a retail market of a
type the same as or similar to the type of programs offered or provided or markets targeted in or by the System.
Franchisee specifically acknowledges that, pursuant to this Agreement, Franchisee will receive valuable training and confidential information, including, without limitation, CITY WIDE's past, present or prospective client list, pricing formulas, policies, bids, quotes, proposals, profitability, margin strategies, presentation strategies and techniques, business plans, training materials, and additional information regarding the promotional, operational, sales and marketing methods and techniques of CITY WIDE and the System.
Accordingly, Franchisee covenants that, except as otherwise approved in writing by CITY WIDE, Franchisee will not, for a period of two (2) years after the expiration or termination of this Agreement, regardless of the cause of termination, either directly or indirectly, for himself, or through, on behalf of, or in conjunction with any person, persons, partnership, or corporation, own, maintain, engage in, consult with or have any interest in any business specializing, in whole or in part, in providing the same or similar services or products or activities of any type or nature, targeted at a market of a type the same as or similar to the type of programs offered or provided or markets targeted in or by the System:
- a.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, a franchisee is restricted from engaging in any competitive business during the term of the franchise agreement unless they obtain written approval from City Wide. Specifically, the franchisee cannot directly or indirectly own, maintain, engage in, consult with, or have any material interest in a competitive business that offers similar services or products. This restriction applies to businesses that target the same or similar retail market as the City Wide system.
This non-compete obligation extends both during the franchise term and for a period of two years after the agreement's expiration or termination. This post-term restriction also requires written approval from City Wide to engage in a similar business. The FDD specifies that this is due to the valuable training and confidential information, such as client lists, pricing formulas, and business plans, that franchisees receive.
For a prospective franchisee, this means that you cannot operate a similar business while operating a City Wide franchise without explicit written permission. After the franchise agreement ends, you are still restricted from operating a similar business for two years unless City Wide provides written approval. This is a standard practice in franchising to protect the brand and system that the franchisee is licensing. It is important to carefully consider these restrictions and discuss any potential conflicts of interest with City Wide before entering into a franchise agreement.