Is a City Wide franchisee required to execute a Non-Compete Agreement?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12.1 Franchisee is required to execute the Non-Compete Agreement attached to this Agreement as Attachment F.
- 12.2 Franchisee agrees to provide to CITY WIDE in the form attached to this Agreement as Attachment A-1, an unconditional guaranty of payment and performance of each and every undertaking, fee, agreement, duty, and covenant of Franchisee set forth in this Agreement, which guaranty must be executed by the principals, owners, directors, or stockholders of Franchisee, as the case may be, or by such other persons or entities as CITY WIDE may require. Additionally, spouses or domestic partners of principals, owners or stockholders will be required to provide a conditional guaranty of payment in the form attached to this Agreement as Attachment A-2.
- 12.3 Franchisee covenants that Franchisee has applied for, secured, and agrees to always maintain during the Term of this Agreement a general contractor's license, if required by state or local law, and any other permits, licenses, and/or approvals which may be required to operate Franchisee's Franchised Business within the Designated Territory.
- 12.4 Each of the foregoing covenants and the covenants of the Non-Compete Agreement will be construed as independent of any other covenant or provision of this Agreement. Franchisee and all guarantors expressly agree that the existence of any claim they may have against CITY WIDE, whether arising from this Agreement, will not constitute a defense to the enforcement by CITY WIDE of the covenants in this Section.
- 12.5 CITY WIDE has the right to require Franchisee to execute similar covenants, in a form satisfactory to CITY WIDE, with all of Franchisee's personnel who perform managerial or supervisory functions and all personnel who receive training from CITY WIDE.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, franchisees are required to execute a Non-Compete Agreement. Specifically, Section 12.1 states this requirement, referencing Attachment F of the Franchise Agreement. This agreement places restrictions on the franchisee's activities both during the term of the agreement and for a period of two years after its expiration or termination.
During the term of the Non-Compete Agreement, franchisees are prohibited from diverting business or customers to competitors, or engaging in any activity that could harm the goodwill associated with City Wide's marks and system. They are also restricted from owning, maintaining, or having a material interest in any competitive business that offers similar services or products targeted at the same retail market as the City Wide system, unless otherwise approved in writing by City Wide.
Post-termination, for a period of two years, the franchisee is restricted from owning, maintaining, engaging in, consulting with, or having any interest in a business that specializes in providing similar services or products targeting the same market as City Wide. These restrictions apply regardless of the reason for termination. However, Paragraph 9 states that these non-compete obligations do not apply to the ownership of less than a five percent (5%) beneficial interest in the outstanding equity securities of any corporation which is registered under the Securities Exchange Act of 1934.
The Non-Compete Agreement also specifies geographical limitations. During the term of the agreement, the franchisee is restricted from competing within a 150-mile radius of their franchised business location, within the metropolitan statistical area where their business is located, or within a 150-mile radius of any other business using the City Wide system. City Wide retains the right to modify the scope of these covenants. The agreement also allows City Wide to seek equitable remedies, such as restraining orders, to protect its confidential information and acknowledges that monetary damages alone may not be sufficient compensation for a breach of the agreement.