If a City Wide franchisee proposes to sell their business, what is the franchisee's obligation to City Wide?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- 20.2 If Franchisee or its owners propose to sell the Franchised Business (or its assets) or part or all of the ownership of Franchisee, Franchisee or its owners will deliver a bona fide, executed written offer to purchase same to CITY WIDE, who will, for a period of sixty (60) days from the date of delivery of such offer, have the right, but not the obligation, exercisable by written notice to Franchisee or its owners, to purchase the Franchised Business (or its assets) or such ownership for the price and payment terms contained in such bona fide offer, provided that CITY WIDE may substitute cash for any form of payment proposed in such offer and may require Franchisee to enter into an asset purchase agreement or similar agreement containing the terms and conditions that are customary for such a transaction ("Right of First Refusal"). If CITY WIDE does not exercise its Right of First Refusal, the offer may be accepted by Franchisee or its owners, subject to the prior written approval of CITY WIDE, as provided in Section 22 of this Agreement; provided that if such offer is not so accepted by Franchisee within one hundred twenty (120) calendar days of the date of such offer, or if the offer is modified in any material way from the original bona fide offer presented to CITY WIDE, CITY WIDE will again have this Right of First Refusal. Should a transferee franchisee assume the rights and obligations under this Agreement, such transferee franchisee will likewise be subject to CITY WIDE's Right of First Refusal under the terms and conditions as set forth in this Agreement.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, if a franchisee proposes to sell their business, they must first deliver a bona fide, executed written offer to City Wide. City Wide then has 60 days from the date of delivery to exercise its Right of First Refusal, allowing them to purchase the business (or its assets) or ownership for the price and payment terms outlined in the offer. City Wide can substitute cash for any proposed payment method and may require the franchisee to enter into an asset purchase agreement with customary terms.
If City Wide chooses not to exercise its Right of First Refusal, the franchisee can accept the offer, but only with City Wide's prior written approval, as detailed in Section 22 of the agreement. However, if the offer isn't accepted within 120 calendar days or is materially modified from the original offer presented to City Wide, City Wide regains its Right of First Refusal. Any transferee franchisee who assumes the agreement is also subject to City Wide's Right of First Refusal under the same terms.
These stipulations ensure City Wide maintains control over who enters the franchise system and protects the brand's interests. The Right of First Refusal allows City Wide to strategically acquire existing businesses, while the approval process ensures that new owners meet their standards. Franchisees should be aware of these conditions, as they can impact the timeline and terms of a potential sale. Prospective franchisees should discuss with City Wide the criteria they use for approving potential buyers and any factors that could lead to a rejection of a proposed sale.