If a City Wide franchisee engages in a business that competes with the System, what is City Wide's recourse?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
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
CITY WIDE will be entitled to immediate equitable remedies, including but not limited to, restraining orders in order to safeguard such proprietary, confidential, unique and special information of CITY WIDE and that money damages alone would be an insufficient remedy with which to compensate CITY WIDE for any breach of the terms of this Non-Compete Agreement.
Nothing herein shall, however, be construed as prohibiting CITY WIDE from pursuing any other remedies available to CITY WIDE for such breach or threatened breach, including recovery of damages from the franchisee.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to the 2025 City Wide Franchise Disclosure Document, City Wide has several avenues of recourse if a franchisee engages in a business that competes with the City Wide system. City Wide is entitled to immediate equitable remedies, including restraining orders, to protect its proprietary, confidential, unique, and special information. The FDD states that monetary damages alone may not be sufficient to compensate City Wide for a breach of the non-compete agreement.
City Wide is not limited to equitable remedies and may pursue any other remedies available, including recovering damages from the franchisee. This indicates that City Wide can seek both injunctive relief to stop the competitive activity and monetary compensation for any losses suffered as a result of the franchisee's breach.
The non-compete agreement specifies that the franchisee will not divert or attempt to divert any business or customers of the franchised business to any competitor, nor engage in any action that is injurious or prejudicial to the goodwill associated with City Wide's marks and the system. The franchisee also cannot own, maintain, engage in, consult with, or have any material interest in any competitive business specializing in similar services or products targeted at a similar retail market as the City Wide system. These restrictions apply during the term of the Non-Compete Agreement, unless otherwise approved in writing by City Wide.
These measures are in place to protect City Wide's business model, trade secrets, and customer relationships. A prospective franchisee should carefully review the non-compete provisions and understand the full scope of these restrictions before entering into a franchise agreement with City Wide.