Under what circumstances does City Wide have the right to manage the City Wide franchised business for the franchisee's account?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.32 CITY WIDE's Right to Manage.
Franchisee hereby grants to CITY WIDE the right to take such steps as are necessary to manage the Franchised Business for the account of Franchisee in the event of Franchisee's death or in the event that an independent third party (such as a medical doctor) reasonably determines that Franchisee is incapacitated or incapable of running the Franchised Business, and to receive a reasonable fee for such services.
- 13.9 Temporary Operation by CITY WIDE.
In order to prevent any interruption of the operation of the Franchised Business which would cause harm to that business and thereby depreciate the value of the Franchised Business, in the event that Franchisee is dead or absent or incapacitated as defined in this Agreement and is not, therefore, in the sole judgment of CITY WIDE, able to operate the Franchised Business, then CITY WIDE is authorized to operate the Franchised Business for so long as CITY WIDE
deems necessary and practical, and without waiver of any other rights or remedies CITY WIDE may have under this Agreement; provided, however, that CITY WIDE will not be obligated to operate the Franchised Business. All monies from the operation of the Franchised Business during such period of operation by CITY WIDE will be kept in a separate account and the expenses of the Franchised Business, including reasonable compensation and expenses for CITY WIDE's representative, will be charged to that separate account. If CITY WIDE temporarily operates the Franchised Business for Franchisee, Franchisee will indemnify and hold harmless CITY WIDE and any representative of CITY WIDE who may act hereunder, from all claims arising from the acts and omissions of CITY WIDE and its representative.
SECTION 21. Operation In the Event Of Absence, Incapacity Or Death
In order to prevent any interruption of the operation of the Franchised Business which would cause harm to or depreciate its value, in the event that Franchisee is absent, dies or becomes incapacitated as defined in this Agreement, and in the sole and absolute judgment of CITY WIDE is not able to operate the Franchised Business, Franchisee authorizes CITY WIDE to operate the Franchised Business for so long as CITY WIDE deems necessary and practical, and without waiver of any other rights or remedies CITY WIDE may have under this Agreement; provided, however, that CITY WIDE will not be obligated to operate the Franchised Business. All monies from the operation of the Franchised Business during such period of operation by CITY WIDE will be kept in a separate account and the expenses of the business, including reasonable compensation and expenses for CITY WIDE's Representative, will be charged to that account. If CITY WIDE temporarily operates the Franchised Business for Franchisee, Franchisee will indemnify and hold harmless CITY WIDE and any Representative of CITY WIDE who may act under this section, from all claims arising from the acts and omissions of CITY WIDE and its Representative.
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 right to manage the franchised business under specific circumstances to ensure business continuity and protect its value. City Wide can step in to manage the business if the franchisee dies, is absent, or becomes incapacitated, preventing them from operating the business effectively. This intervention is based on City Wide's judgment that the franchisee is unable to manage the business.
City Wide's temporary operation aims to prevent any interruption that could harm the business's value. During this period, all revenues generated are kept in a separate account, and all business expenses, including compensation for City Wide's representative, are charged to this account. This arrangement ensures transparency and accountability in the financial management of the business during the temporary operation.
The franchisee is required to indemnify City Wide and its representatives from any claims arising from their acts or omissions while managing the business. However, City Wide is not obligated to take over the operation, retaining the discretion to decide whether to intervene. This provision highlights the importance of having a contingency plan in place, such as a designated successor or a co-owner, to ensure the smooth operation of the business in unforeseen circumstances.