What happens if a City Wide franchisee is convicted of a felony?

According to City Wide's 2025 Franchise Disclosure Document, if a franchisee is convicted of a felony, City Wide has grounds to terminate the franchise agreement. Specifically, City Wide can terminate the agreement if the franchisee is convicted of infringing on a copyright, trademark, trade name, or service mark of any third party, or appropriating the trade secrets or confidential information of any third party. This clause protects City Wide from legal liabilities and reputational damage that could arise from a franchisee's criminal activities related to intellectual property or confidential information.

This provision is fairly standard in franchising, as franchisors need to protect their brand and system from damage caused by franchisee misconduct. The termination would be considered a default, meaning the franchisee would likely lose any rights to a Royalty Rebate they might have otherwise been entitled to. Additionally, upon termination, the franchisee must cease operating as a City Wide franchisee, discontinue using City Wide's system or marks, and fulfill all post-termination obligations, including paying any outstanding debts to City Wide, which may include lost royalties and marketing fees for the remainder of the term.

It is important for prospective City Wide franchisees to understand that a criminal conviction related to intellectual property or trade secrets can lead to the termination of their franchise agreement. This highlights the importance of operating the franchise in an ethical and legally compliant manner to avoid such consequences. Franchisees should ensure they have a clear understanding of intellectual property laws and take steps to protect the confidential information of third parties to prevent any actions that could be construed as infringement or misappropriation.