Can City Wide reduce the scope of the non-compete covenants without the franchisee's consent?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee understands and acknowledges that CITY WIDE will have the right, in its sole and absolute discretion, to reduce the scope of any covenant set forth in Paragraphs 3 and 4 in this Non-Compete Agreement, or any portion thereof, without Franchisee's consent, effective immediately upon receipt by Franchisee of written notice thereof, and Franchisee will comply forthwith with any covenant as so modified, which will be fully enforceable notwithstanding any contrary provisions of the Franchise Agreement, if any.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, City Wide has the right to reduce the scope of the non-compete covenants without the franchisee's consent. City Wide can modify the non-compete agreement effective immediately after the franchisee receives written notice. The franchisee must then comply with the modified covenant. This modification is enforceable regardless of any conflicting provisions in the Franchise Agreement.
This provision gives City Wide significant flexibility to adjust the non-compete terms as they see fit. This could be advantageous if City Wide reduces the scope, making it easier for a franchisee to pursue other business ventures after leaving the franchise. However, it also carries the risk that City Wide could broaden the non-compete agreement, further restricting the franchisee's future activities.
Franchisees should carefully consider this clause and its potential impact on their future business opportunities. It is important to understand the specific restrictions outlined in the non-compete agreement and to assess the likelihood and potential consequences of City Wide exercising its right to modify the agreement. Prospective franchisees may want to seek legal counsel to fully understand the implications of this provision.