If City Wide responds to a Cyber Event, does this create any liability for City Wide?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
If a Cyber Event occurs, City Wide reserves the right, but shall not have any obligation, to perform and/or control and/or cause its third-party consultants to perform and/or control all aspects of the response to the Cyber Event including, without limitation, the investigation, containment and resolution of the Cyber Event and all communications.
City Wide's control of the response to a Cyber Event shall not create any liability for City Wide or additional rights for Franchisee, entitle Franchisee to damages or relieve Franchisee of Franchisee's indemnification obligations under Section 7.
Franchisee shall reimburse City Wide for all of City Wide's out-of-pocket costs and expenses incurred in responding to and remedying any Cyber Event if such Cyber Event is conclusively determined to have been caused solely by Franchisee or directly related to Franchisee's Franchised Business operations.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, City Wide's control of the response to a Cyber Event does not create liability for City Wide or additional rights for the franchisee. It also does not entitle the franchisee to damages or relieve the franchisee of their indemnification obligations. However, if the Cyber Event is conclusively determined to have been caused solely by the franchisee or directly related to the franchisee's franchised business operations, the franchisee is required to reimburse City Wide for all out-of-pocket costs and expenses incurred in responding to and remedying the Cyber Event.
This means that while City Wide may take control of the response to a Cyber Event to protect the system, they are not liable for any damages or losses the franchisee may incur as a result of the event or City Wide's response. The franchisee remains responsible for protecting their Technology System against cyber events and for complying with data privacy and security laws. They are also expected to seek advice from their own legal and security consultants to ensure they operate the franchised business in full compliance with data security safeguards.
This arrangement places a significant responsibility on the franchisee to maintain robust cybersecurity measures. The franchisee bears the financial risk of cyber events caused by their own actions or business operations, including reimbursing City Wide for response costs. Prospective franchisees should carefully consider the costs associated with cybersecurity and data protection when evaluating this franchise opportunity. They should also consult with legal and IT professionals to understand their obligations and implement appropriate safeguards.