Does City Wide have the right to unreasonably withhold consent or approval from a franchisee?

According to City Wide's 2025 Franchise Disclosure Document, City Wide agrees not to unreasonably withhold any consent or approval that requires their prior approval. Franchisees must make a timely written request for approval, and City Wide will generally respond with approval or disapproval within fifteen days, unless a different time period is specified in the agreement. If City Wide does not respond within that time, the franchisee's request will be deemed disapproved.

This clause provides some protection to the franchisee, ensuring that City Wide cannot arbitrarily delay or deny necessary approvals. This is important for operational efficiency and the franchisee's ability to run their business effectively. For example, if a franchisee needs approval for a specific marketing campaign or a new piece of equipment, City Wide is obligated to respond reasonably and within a defined timeframe.

However, the FDD also states that City Wide's decisions will be considered the result of Reasonable Business Judgment if the decision or action is intended to promote or benefit the City Wide system, even if it also promotes City Wide's financial or other individual interest. Examples of benefiting the system include enhancing the value of the marks, improving customer service, improving product quality, improving uniformity, enhancing or encouraging modernization, and improving the competitive position of the system. This clause gives City Wide considerable latitude in making decisions that affect the franchise system, as long as they can demonstrate a reasonable business rationale.

Prospective franchisees should carefully consider the implications of these provisions. While City Wide agrees not to unreasonably withhold consent, their definition of "Reasonable Business Judgment" provides them with significant discretion. Franchisees should seek clarification and examples from existing franchisees to understand how this clause has been applied in practice and to assess the potential impact on their business operations.