Under what circumstances does City Wide have the option to purchase the assets of a franchised business?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- 20.1 Upon termination or expiration of this Agreement, CITY WIDE will have an option, but not an obligation, to purchase from Franchisee all or any assets of the Franchised Business, including, without limitation all supplies, equipment, advertising materials, and other indicia bearing CITY WIDE's Marks, at fair market value. CITY WIDE may exercise this option ("Option to Purchase") by giving Franchisee written notice within sixty (60) calendar days after such termination. If the parties cannot agree on fair market value within a reasonable time, an independent appraiser acceptable to Franchisee will be designated by CITY WIDE, whose determination will be binding. If CITY WIDE elects to exercise any Option to Purchase as provided, it will have the right to set off all amounts due from Franchisee under this Agreement, and the cost of the appraisal, if any, against any payment. CITY WIDE shall have up to twelve (12) months to pay the entirety of the agreed upon purchase price, upon its exercise of its Option to Purchase the business contained herein. CITY WIDE must pay at fifty percent (50%) of the purchase price at the time of exercising its Option to Purchase to defer payment of the remainder over a six (6) month period.
- 20.2 If Franchisee or its owners propose to sell the Franchised Business (or its assets) or part or all of the ownership of Franchisee, Franchisee or its owners will deliver a bona fide, executed written offer to purchase same to CITY WIDE, who will, for a period of sixty (60) days from the date of delivery of such offer, have the right, but not the obligation, exercisable by written notice to Franchisee or its owners, to purchase the Franchised Business (or its assets) or such ownership for the price and payment terms contained in such bona fide offer, provided that CITY WIDE may substitute cash for any form of payment proposed in such offer and may require Franchisee to enter into an asset purchase agreement or similar agreement containing the terms and conditions that are customary for such a transaction ("Right of First Refusal"). If CITY WIDE does not exercise its Right of First Refusal, the offer may be accepted by Franchisee or its owners, subject to the prior written approval of CITY WIDE, as provided in Section 22 of
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, City Wide has the option to purchase a franchised business's assets under two primary circumstances. First, upon the termination or expiration of the franchise agreement, City Wide has the option to purchase all or any of the assets of the franchised business. These assets include supplies, equipment, advertising materials, and anything bearing City Wide's marks, all at fair market value. City Wide must provide written notice of its intent to exercise this option within 60 calendar days after termination or expiration of the agreement.
Second, if a franchisee proposes to sell the franchised business (or its assets) or ownership, the franchisee must deliver a written offer to City Wide. City Wide then has 60 days to exercise its right of first refusal to purchase the business (or its assets) or ownership at the price and payment terms outlined in the offer. City Wide can substitute cash for any proposed form of payment and may require the franchisee to enter into an asset purchase agreement with customary terms and conditions.
In the event City Wide exercises its option to purchase after termination, the company has the right to offset any amounts owed by the franchisee under the agreement, as well as the cost of any appraisal, against the purchase price. City Wide has up to 12 months to pay the agreed-upon purchase price, but must pay 50% of the purchase price when exercising the option to defer the remaining payment over six months. If City Wide does not exercise its right of first refusal when the franchisee proposes a sale, the franchisee may proceed with the sale, subject to City Wide's prior written approval.