Under what conditions does City Wide reserve the right to reject a proposed sale of a City Wide franchise?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
CITY WIDE reserves the right to reject any proposed sale based on CITY WIDE's determination, at CITY WIDE's sole and absolute right, that the purchase price or purchase terms agreed to between Franchisee and any prospective buyer is excessive or will not enable the buyer to succeed as a franchisee in the Franchised Business, and by requesting CITY WIDE's assistance Franchisee waives any liability claims it may have against CITY WIDE for such rejection.
- 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 reserves the right to reject a proposed sale of a franchise if it determines, at its sole and absolute right, that the agreed-upon purchase price or purchase terms between the franchisee and the prospective buyer are either excessive or would prevent the buyer from succeeding as a franchisee. This condition applies when the franchisee requests City Wide's assistance in locating a prospective buyer. By requesting City Wide's help, the franchisee waives any liability claims against City Wide for such a rejection.
This provision gives City Wide significant control over who can become a franchisee within their system. It ensures that new franchisees are set up for success and that the financial terms of the sale are reasonable. This protects the brand and the interests of other franchisees in the system.
For a prospective City Wide franchisee, this means that if you decide to sell your franchise and seek assistance from City Wide in finding a buyer, City Wide has the final say on whether the sale goes through. It is crucial to understand that City Wide's determination is based on their assessment of the buyer's potential for success and the reasonableness of the financial terms, not solely on the seller's desire to exit the business. Therefore, when negotiating a sale, it's important to consider what City Wide would deem acceptable to avoid potential rejection of the proposed buyer.
It is also important to note that City Wide has a right of first refusal. If a franchisee proposes to sell the Franchised Business, the franchisee must first deliver a bona fide, executed written offer to purchase to City Wide, who will have the right, but not the obligation, to purchase the Franchised Business for the price and payment terms contained in such bona fide offer. If City Wide does not exercise its Right of First Refusal, the offer may be accepted by Franchisee, subject to the prior written approval of City Wide.