Does City Wide have an obligation to purchase the assets of the Franchised Business upon termination or expiration of the Franchise Agreement?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
20.1 Upon termination or expiration of this Agreement, CITY WIDE will have an option, but not an obligation, to purchase from Franchisee all or any assets of the Franchised Business, including, without limitation all supplies, equipment, advertising materials, and other indicia bearing CITY WIDE's Marks, at fair market value. CITY WIDE may exercise this option ("Option to Purchase") by giving Franchisee written notice within sixty (60) calendar days after such termination. If the parties cannot agree on fair market value within a reasonable time, an independent appraiser acceptable to Franchisee will be designated by CITY WIDE, whose determination will be binding. If CITY WIDE elects to exercise any Option to Purchase as provided, it will have the right to set off all amounts due from Franchisee under this Agreement, and the cost of the appraisal, if any, against any payment. CITY WIDE shall have up to twelve (12) months to pay the entirety of the agreed upon purchase price, upon its exercise of its Option to Purchase the business contained herein. CITY WIDE must pay at fifty percent (50%) of the purchase price at the time of exercising its Option to Purchase to defer payment of the remainder over a six (6) month period.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, City Wide does not have an obligation to purchase the assets of the franchised business upon termination or expiration of the Franchise Agreement. Instead, City Wide has an option to purchase the assets, but is not required to do so.
Specifically, upon termination or expiration of the agreement, City Wide has the option to purchase all or any of the assets of the franchised business at fair market value. These assets include supplies, equipment, advertising materials, and anything bearing City Wide's marks. To exercise this option, City Wide must provide written notice within 60 calendar days after termination or expiration.
If City Wide and the franchisee cannot agree on the fair market value, City Wide will designate an independent appraiser acceptable to the franchisee, and that appraiser's determination will be binding. City Wide can offset any amounts owed by the franchisee under the agreement, as well as the cost of the appraisal, against the purchase price. City Wide has up to 12 months to pay the full purchase price, but must pay 50% of the purchase price when exercising the option to purchase and can defer the remaining payment over six months.