For how long after the termination or expiration of the City Wide Franchise Agreement is the franchisee prohibited from engaging in a similar business?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
Accordingly, Franchisee covenants that, except as otherwise approved in writing by CITY WIDE, Franchisee will not, for a period of two (2) years after the expiration or termination of this Agreement, regardless of the cause of termination, either directly or indirectly, for himself, or through, on behalf of, or in conjunction with any person, persons, partnership, or corporation, own, maintain, engage in, consult with or have any interest in any business 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 market of a type the same as or similar to the type of programs offered or provided or markets targeted in or by the System:
- a.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, a franchisee is restricted from engaging in a similar business for a period of two years after the termination or expiration of the Franchise Agreement. This restriction applies regardless of the reason for termination. During this two-year period, the franchisee is prohibited from owning, maintaining, engaging in, consulting with, or having any interest in a business that specializes in providing similar services or products to the same target market as the City Wide system.
This non-compete clause prevents a former City Wide franchisee from using the knowledge, training, and confidential information gained during their franchise term to directly compete with City Wide. The confidential information includes client lists, pricing strategies, business plans, and marketing techniques. The restriction is in place to protect City Wide's market share and the integrity of its franchise system.
The franchisee can only engage in a similar business within this two-year window if they receive written approval from City Wide. This requirement gives City Wide control over potential competition from former franchisees. It is a fairly standard practice in franchising to include a post-term non-compete agreement, as the franchisor has a vested interest in protecting their brand and system.
A prospective franchisee should carefully consider the implications of this non-compete clause. They should evaluate whether the two-year restriction would unduly limit their future business opportunities should they decide to leave the City Wide system. It is advisable to seek legal counsel to fully understand the scope and enforceability of the non-compete agreement in their specific jurisdiction.