What is the impact of a materially false statement made to City Wide by a franchisee?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
ituted against Franchisee and not dismissed within ninety (90) days; or
- 14.1.3 If any of Franchisee's real or personal property will be sold after levy upon it by any sheriff, marshal, or constable; or
- 14.1.4 If Franchisee or any officer, director, stockholder, or general partner of Franchisee is convicted of or admits to the commission of any felony or crime involving moral turpitude or any other crime that CITY WIDE reasonably determines could have an adverse effect on the Franchised Business, the System, or the Marks; or
- 14.1.5 If Franchisee knowingly maintains false books or records or make or have made any materially false statement or report to CITY WIDE in connection with this Agreement or Franchisee's application for this Franchise;
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, if a franchisee knowingly makes a materially false statement or report to City Wide, it constitutes a default under the franchise agreement. Specifically, this applies to false statements made in connection with the agreement itself or the franchisee's application for the franchise.
Upon such a default, City Wide has the option to terminate the franchise agreement and all rights granted to the franchisee under it. However, City Wide must first provide the franchisee with written notification outlining the nature of the default, referred to as a "Notice to Cure." The franchisee then has thirty (30) days from the date of the notice, or another period set forth in the agreement or allowed by law, to correct the default to City Wide's satisfaction.
If the franchisee fails to correct the default within the specified cure period, City Wide can immediately terminate the agreement without further notice or action. This means the franchisee would lose the right to operate under the City Wide brand and system. Certain obligations, such as those relating to the use and protection of City Wide's trademarks and confidential information, will survive the termination of the agreement.
This clause highlights the importance of honesty and accuracy in all dealings with City Wide. Franchisees should ensure that all information provided to City Wide, whether during the application process or throughout the term of the agreement, is truthful and complete. Failure to do so could result in the termination of the franchise and the loss of the franchisee's investment.