What does 'transfer' mean in the context of a City Wide franchise agreement?
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 |
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, a 'transfer' by a franchisee encompasses several scenarios. Specifically, it includes the transfer of the franchise agreement itself, the transfer of the business's assets, or any change in the ownership of the franchise. This definition is important because it establishes that any of these actions are considered a transfer under the terms of the agreement, triggering certain requirements and restrictions.
City Wide maintains the right to approve all proposed transfers by a franchisee, though the FDD states that such approval will not be unreasonably withheld. This provision gives City Wide oversight regarding who becomes a new franchisee or owner within their system. To gain approval for a transfer, a franchisee must request approval from City Wide at least 60 days in advance. Additionally, the franchisee must pay a transfer fee of $25,000, as well as any applicable third-party broker fees.
Furthermore, the franchisee must be in full compliance with the Franchise Agreement and Operating Manual at the time of the proposed transfer. The prospective transferee must also meet City Wide's standards, agree to complete any required upgrades to the business, and sign the current version of the franchise agreement. The transferee is also responsible for paying all required fees, including initial franchise fees. These conditions ensure that any new franchisee or owner meets City Wide's standards and is fully committed to the franchise system.
City Wide also has a right of first refusal to purchase the franchised business if the franchisee proposes to sell it. This means that before a franchisee can sell to a third party, City Wide has the option to purchase the business at the same price, terms, and conditions offered to the franchisee, with the exception that City Wide can substitute cash for payment terms. This right of first refusal allows City Wide to maintain control over who enters the franchise system and potentially consolidate ownership if desired.