Does the City Wide non-compete agreement prevent a franchisee from engaging in a competitive business they operated before entering into the Franchise Agreement?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
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- 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:
- 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
type the same as or similar to the type of programs offered or provided or markets targeted in or by the System.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the non-compete agreement does prevent a franchisee from engaging in a competitive business they operated before entering into the Franchise Agreement. During the term of the Non-Compete Agreement, the franchisee cannot own, maintain, engage in, consult with, or have any material interest in any competitive business, including businesses the franchisee operated prior to signing the Franchise Agreement. This restriction applies if the competitive business specializes in providing the same or similar services, products, or activities targeted at a similar retail market as the City Wide system.
This means that if a prospective City Wide franchisee already owns a business that offers services similar to those offered by City Wide, they would generally have to divest themselves of that business or cease its competitive operations upon entering into the Franchise Agreement. However, this restriction can be waived if City Wide provides written approval.
This non-compete provision aims to protect City Wide's market position, trade secrets, and established customer base. It ensures that franchisees focus their efforts on growing the City Wide business and do not use the franchisor's confidential information or system to benefit a competing venture. Franchisees should carefully evaluate this restriction and discuss any potential conflicts with existing businesses with City Wide before signing the Franchise Agreement.