Does City Wide have a right of first refusal if a franchisee proposes to sell their City Wide business?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary | |
|---|---|---|---|
| reasonable attorneys' | |||
| fees, incurred by CITY | |||
| WIDE subsequent to termination or expiration in | |||
| connection with obtaining injunctive or other relief | |||
| under the Franchise Agreement; provide all signage | |||
| to CITY WIDE; and take further action as may be | |||
| required by the Operating | |||
| Manual or reasonably | |||
| requested by CITY WIDE; and, if due to your | |||
| default, forfeit any royalty rebate. | |||
| j. | Assignment of contract by | Section 13 | No restriction on CITY WIDE's |
| Franchisor | right to assign. | ||
| k. | "Transfer" by you – definition | Section 13 | Includes transfer of contract or assets or change in ownership. |
| l. | Franchisor's approval of transfer by you | Section 13 | CITY WIDE has the right to approve all transfers, but will not unreasonably withhold approval. |
| m. | Conditions for Franchisor's approval of transfer | Section 13 | You must ask CITYWIDE at least 60 days before to approve a transfer; you must pay a Transfer Fee equal to $25,000 and pay any applicable third-party broker fee; you must be in compliance with the Franchise Agreement and Operating Manual; transferee must meet CITY WIDE's standards, agree to make required upgrades, sign the current form of franchise agreement, and pay all required fees (including Initial Fees). |
| n. | Franchisor's right of first refusal to acquire your business | Section 20 | If you propose to sell the Franchised Business, its assets or part of the ownership of Franchisee, CITY WIDE will have a right of first refusal for 60 days to purchase for the price, terms and conditions offered to you (except CITY WIDE may substitute cash for payment terms). |
| o. | Franchisor's option to purchase your business | Section 20 | When the Agreement terminates or expires, CITY WIDE will have an option, but not an obligation, to purchase from you any assets of the Franchised Business and any materials containing the Marks at the lower of fair market value or your cost; CITY WIDE must notify you within 60 days after the termination or expiration. CITY WIDE shall have up to six months to pay the entirety of the agreed upon purchase price. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 44–47)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, City Wide does have a right of first refusal if a franchisee proposes to sell their business. Specifically, if a franchisee proposes to sell the Franchised Business, its assets, or part of the ownership of the Franchisee, City Wide has 60 days to purchase it at the same price, terms, and conditions offered to the franchisee. However, City Wide can substitute cash for any payment terms initially offered.
This right of first refusal is a common provision in franchise agreements. It allows City Wide to maintain control over who enters the franchise system and prevents the transfer of a franchise to someone who may not meet their standards or be a good fit for the brand. It also gives City Wide the option to expand its company-owned operations by acquiring successful franchise locations.
For a prospective franchisee, this means that if they decide to sell their City Wide franchise, they must first offer the business to City Wide on the same terms they would offer it to a third-party buyer. This could potentially delay the sale process by 60 days, as City Wide has that time to decide whether to exercise its right of first refusal. While the franchisee is assured of getting the same price and terms, they should be prepared for the possibility that City Wide will choose to purchase the business itself.
Additionally, in the event of the franchisee's death or disability, the FDD states that a survivor or estate has a period of time to transfer the franchise, but this is also subject to City Wide's right of first refusal, potentially extending the transfer period by up to 60 days.