What obligations of the Franchise Agreement are excluded from the 'proof of sufficient assets' requirement for a City Wide franchise?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.3 Proof of Sufficient Assets. Within thirty (30) days after the execution of this Agreement, Franchisee must obtain, secure and furnish adequate proof of financing or furnish proof of the existence of assets in Franchisee's sole control, that is sufficient and in acceptable form to CITY WIDE, to fully and completely discharge the obligations of this Agreement (except Franchisee's continuing Royalty Fee and Marketing Fee contributions, and any other continuing obligation Franchisee owes CITY WIDE during the term of this Agreement, as defined and outlined in this Agreement). CITY WIDE will have the sole and absolute right to determine the sufficiency of all such proof of financing or assets. CITY WIDE will not begin training until Franchisee satisfies this requirement.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, franchisees must furnish proof of sufficient assets within 30 days of executing the Franchise Agreement. However, this requirement does not extend to all financial obligations.
Specifically, the franchisee's ongoing Royalty Fee and Marketing Fee contributions are excluded from the 'proof of sufficient assets' requirement. Additionally, any other continuing financial obligations that the franchisee owes City Wide during the term of the agreement are also excluded.
In simpler terms, a prospective City Wide franchisee needs to demonstrate they have enough assets to cover the initial costs and start-up expenses, but they don't need to show they have enough assets to cover all future royalty and marketing fees for the entire duration of the franchise agreement. This is a fairly standard practice in franchising, as it would be difficult for most franchisees to prove they have the assets to cover all future fees.