If City Wide agrees to exercise its rights reasonably, how will City Wide satisfy its obligations?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- 24.4 Whenever Franchisor reserves discretion in a particular area or where Franchisor agrees to exercise Franchisor's right reasonably or in good faith, Franchisor will satisfy Franchisor's obligations whenever Franchisor exercises reasonable business judgment ("Reasonable Business Judgment") in making Franchisor's decision or exercising Franchisor's rights. Franchisor's decisions or actions will be deemed to be the result of Reasonable Business Judgment, even if other reasonable or even arguably preferable alternatives are available, if Franchisor's decision or action is intended, in whole or significant part, to promote or benefit the System generally even if the decision or action also promotes Franchisor's financial or other individual interest. Examples of items that will promote or benefit the System, include, without limitation, enhancing the value of the Marks, improving customer service and satisfaction, improving product quality, improving uniformity, enhancing, or encouraging modernization, and improving the competitive position of the System.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, when City Wide reserves discretion or agrees to exercise its rights reasonably or in good faith, it will satisfy its obligations by exercising reasonable business judgment. This means City Wide's decisions will be considered appropriate if they are based on reasonable business judgment when making decisions or exercising its rights.
City Wide's decisions or actions are deemed to result from Reasonable Business Judgment even if other alternatives exist, as long as their decision or action is intended to promote or benefit the City Wide system. This includes enhancing the value of the Marks, improving customer service and satisfaction, improving product quality and uniformity, encouraging modernization, and improving the competitive position of the System.
This clause protects City Wide from potential legal challenges by franchisees who might disagree with their business decisions, provided those decisions are made in good faith and intended to benefit the overall franchise system. It also allows City Wide some flexibility in adapting to changing market conditions and competitive pressures without being held liable for decisions that, in hindsight, may not have been optimal but were reasonable at the time.