Does the City Wide non-compete agreement restrict the franchisee from consulting with a competitive business?
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:
- a. Divert or attempt to divert any business or customers of the Franchised Business to any competitor, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any act injurious or prejudicial to the goodwill associated with CITY WIDE's Marks and the System; or
- 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.
Franchisee specifically acknowledges that, pursuant to this Agreement, Franchisee will receive valuable training and confidential information, including, without limitation, CITY WIDE's past, present or prospective client list, pricing formulas, policies, bids, quotes, proposals, profitability, margin strategies, presentation strategies and techniques, business plans, training materials, and additional information regarding the promotional, operational, sales and marketing methods and techniques of CITY WIDE and the System.
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:
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 restricts franchisees from consulting with competitive businesses during the term of the agreement. Specifically, franchisees are prohibited from engaging in, consulting with, or having any material interest in any competitive business that offers similar services or products targeted at similar markets as the City Wide system. This restriction applies unless City Wide provides written approval otherwise.
This non-compete obligation extends beyond the franchise term. For a period of two years after the expiration or termination of the Franchise Agreement, the franchisee is restricted from owning, maintaining, engaging in, consulting with, or having any interest in a similar business. This post-term restriction applies regardless of the reason for termination.
The restrictions apply within a specific geographic area. This area is defined as a 150-mile radius of the franchisee's business location, the metropolitan statistical area where the business is located, or a 150-mile radius of any other City Wide location. However, the non-compete agreement does not apply if the franchisee owns less than a 5% beneficial interest in the equity securities of a corporation registered under the Securities Exchange Act of 1934.
City Wide has the right to seek immediate equitable remedies, such as restraining orders, to protect its confidential information and can also pursue other remedies, including monetary damages, for breaches of the non-compete agreement. Franchisees should be aware of these restrictions and seek legal counsel to fully understand the implications of the non-compete agreement before signing the Franchise Agreement.