Are there any court decisions that could supersede the City Wide franchise agreement?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
nership, or corporation, own, maintain, engage in, consult with or have any interest in any business specializing, in whole or in part, in providing the same or similar services or products or activities of any type or nature, targeted at a market of a type the same as or similar to the type of programs offered or provided or markets targeted in or by the System:
- a. Within a radius of 150 miles of Franchisee's Franchised Business Location.
- b. Within the metropolitan statistical area where Franchisee's Franchised Business is located; or
- c. Within a radius of 150 miles of the Location of any other business using the System, whether franchised or owned by CITY WIDE.
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- Each of the foregoing covenants will be construed as independent of any other covenant or provision of this Agreement. If all or any portion of a covenant in this Non-Compete Agreement is held unreasonable or unenforceable by a court or agency having valid jurisdiction in an unappealed final decision to which CITY WIDE is a party, Franchisee will be bound by any lesser covenant subsumed within the terms of such covenant that imposes the maximum duty permitted by law, as if the resulting covenant were separately stated in and made a part of this Non-Compete Agreement.
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- 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.
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- CITY WIDE will have the right to require Franchisee to enter into similar covenants with all of Franchisee's personnel performing managerial or supervisory functions and all personnel receiving training relating to the CITY WIDE System, in a form satisfactory to CITY WIDE.
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- Franchisee acknowledges, covenants and agrees that CITY WIDE will be entitled to immediate equitable remedies, including but not limited to, restraining orders in order to safeguard such proprietary, confidential, unique and special information of CITY WIDE and that money damages alone would be an insufficient remedy with which to compensate CITY WIDE for any breach of the terms of this Non-Compete Agreement.
Nothing herein shall, however, be construed as prohibiting CITY WIDE from pursuing any other remedies available to CITY WIDE for such breach or threatened breach, including recovery of damages from the franchisee.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the franchise agreement contains provisions addressing the impact of court decisions. Specifically, if a court deems any part of the non-compete agreement unreasonable or unenforceable in a final, unappealed decision to which City Wide is a party, the franchisee is bound by a lesser covenant that imposes the maximum duty permitted by law. This means that the unenforceable portion is replaced with a legally permissible alternative. Also, City Wide retains the right to reduce the scope of any covenant within the non-compete agreement with written notice to the franchisee, and the franchisee must comply with the modified covenant, even if it contradicts the original franchise agreement.
Additionally, the FDD states that if any provision of the agreement is found invalid or in conflict with existing or future law, it will not affect the remaining portions of the agreement, which will remain in full effect. However, if City Wide determines that the finding of illegality adversely affects the basic consideration of the agreement, City Wide has the option to terminate the agreement. This clause ensures that the core elements of the agreement remain intact while allowing City Wide to exit the agreement if fundamental aspects are undermined by legal challenges.
The document also clarifies that franchisees are expressly bound by any promise or covenant imposing the maximum duty permitted by law, even if a court strikes down portions of the provision as unreasonable. This ensures that the franchisee's obligations are interpreted to the fullest extent legally possible. Furthermore, nothing in the agreement is intended to disclaim the representations made by City Wide in the franchise disclosure document, providing an additional layer of protection for the franchisee regarding the information presented during the franchise sales process.
In summary, while the City Wide franchise agreement is designed to remain enforceable to the fullest extent possible, court decisions can modify specific provisions, particularly within the non-compete agreement. City Wide also retains certain rights to modify the agreement in response to legal challenges, and can terminate the agreement if court rulings undermine its fundamental basis. These clauses aim to balance the need for a stable contractual relationship with the realities of potential legal challenges.