What happens if a City Wide franchised business falls out of the top 25%?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
The total revenue retention of Franchisee's Franchised Business must not fall below seventy-seven and five-tenths percent (77.5%) for any rolling twenty-four (24) month period for Franchisee's Business ("Minimum Total Revenue Retention Requirement"), as determined by CITY WIDE in its sole and absolute discretion.
Franchisee acknowledges and agrees that Franchisee's failure to comply with the Minimum Total Revenue Retention Requirement shall constitute a material default of this Agreement for which CITY WIDE may terminate this Agreement.
In the event that Franchisee fails to comply with the Minimum Total Revenue Retention Requirement, CITY WIDE also reserves the right to take corrective action with respect to Franchisee's Franchised Business, which may include the implementation of a plan with which Franchisee agrees to comply.
Franchisee may adjust the Minimum Total Revenue Retention Requirement upon a 30-day prior written notice to Franchisee based upon the increase in the Consumer Price Index as currently measured by the Index as defined below, but not to exceed 3%.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
Based on the 2025 City Wide Franchise Disclosure Document, there is no mention of specific consequences related to a franchise falling out of the top 25%. However, the FDD does state that if the total revenue retention of a City Wide franchise falls below 77.5% for any rolling 24-month period, it constitutes a material default of the agreement. In such cases, City Wide may terminate the agreement or take corrective action, including implementing a plan the franchisee must comply with.
While the FDD does not explicitly address the bottom 25% performance, it emphasizes the importance of maintaining a minimum revenue retention rate. This suggests that City Wide focuses more on consistent revenue performance than relative rankings among franchisees. The revenue retention requirement can be adjusted based on increases in the Consumer Price Index, but not exceeding 3%, providing a slight buffer against economic fluctuations.
Prospective franchisees should inquire with City Wide about the specific benchmarks and support systems in place to help franchisees maintain acceptable performance levels. Understanding the specific metrics used to evaluate franchise performance and the resources available to improve performance is crucial for assessing the risks and opportunities associated with investing in a City Wide franchise. It would be prudent to ask existing franchisees about their experiences with revenue retention and the support they received from City Wide to maintain or improve their business performance.