Can City Wide require a franchisee to have their personnel enter into similar non-compete covenants?

According to City Wide's 2025 Franchise Disclosure Document, City Wide has the right to require franchisees to have their personnel enter into similar non-compete agreements. Specifically, City Wide can require franchisees to enter into these covenants with personnel performing managerial or supervisory functions and all personnel receiving training relating to the City Wide system. The form of these agreements must be satisfactory to City Wide. This requirement is outlined within the contracts section of the Franchise Agreement.

This provision allows City Wide to protect its confidential information, trade secrets, and customer relationships by preventing key employees of the franchisee from working for a competitor or starting a competing business, especially after receiving training from City Wide. It ensures that the investment City Wide makes in training the franchisee's personnel is safeguarded, and that the knowledge and skills gained are not used to benefit a competing entity.

For a prospective franchisee, this means they must be prepared to implement and enforce non-compete agreements with their managerial, supervisory, and trained personnel. This may involve legal costs to ensure the agreements are enforceable in their specific jurisdiction and administrative efforts to manage and monitor compliance. The franchisee should carefully review the form of the non-compete agreement required by City Wide and understand its terms and conditions before signing the Franchise Agreement. Franchisees should also factor in the potential impact on employee relations and recruitment, as some employees may be hesitant to sign such agreements.