Under what circumstances are transfer fees collectable for a City Wide franchise?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
s eligible for a Royalty Rebate, based upon the criteria set forth in the Royalty Rebate Program, Franchisee and the transferee shall split the Royalty Rebate on a pro rata basis based upon the number of months each owned the Franchise Business. For purposes of calculating the Gross Sales, the aggregate of the Gross Sales of Franchisee before the Transfer will be added to the Gross Sales generated by the transferee after the Transfer. If eligible, the Royalty Rebate will be paid as stated herein and in the Operating Manual.
- 13.5 Transfer Fee. In the event CITY WIDE approves a Transfer, Franchisee shall pay to CITY WIDE a transfer fee ("Transfer Fee") which is equal to Twenty Five Thou
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, a transfer fee is generally required when a franchisee transfers their franchise to a new owner. Specifically, if City Wide approves a transfer, the franchisee must pay a transfer fee of $25,000, in addition to any applicable third-party broker fees. This transfer fee is separate from any initial franchise fee that may be due under the current franchise agreement. The prospective transferee must also complete the initial training to City Wide's satisfaction and pay all associated fees. Prior to the transfer, the franchisee must pay all outstanding amounts owed to City Wide and resolve any breaches of their agreements. They must also provide a general release of claims against City Wide.
However, there is an exception to the transfer fee requirement. If the transfer is to or among current owners, or to their immediate family (spouse, domestic partner, or children), and does not result in a loss of control, then the transfer fee and other conditions outlined in Sections 13.4 and 13.5 of the franchise agreement do not apply. This provision allows for internal restructuring or family succession without incurring the standard transfer costs.
Before City Wide approves a transfer, the franchisee and prospective transferee must jointly request an inspection of the location and the franchisee's books and records. City Wide may require repairs, maintenance, or upgrades to the location before approving the transfer. Additionally, City Wide may require the transferee to guarantee the franchisee's obligations under the agreement. City Wide also has the right to assist a franchisee in locating a prospective buyer, but makes no guarantees that a buyer will be found or that the sale price will be acceptable. If City Wide assists in finding a buyer, the franchisee must still adhere to the transfer conditions, including payment of the transfer fee.