Under what conditions is the City Wide Successor Fee paid?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
4 months | $2,900/mo. | | | 25 and all months thereafter | $3,350/mo. | | | Type of Fee1 | Amount | Due Date | Remarks | |-------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | | you under the franchise | | | | | agreement | | | | | (including the Initial | | | | | Fees). The Transfer Fee is in | | | | | addition to any third-party | | | | | broker fee. No Transfer Fee is | | | | | assessed for a transfer to your | | | | | survivor. | | Audit | Amount of underpayment, plus interest at highest legal rate, not to exceed 10%. If underpayment is 2% or more, you must reimburse CITY WIDE for its audit costs. Audit costs may run as much as $6,000. | Upon billing by CITY WIDE. | Payable only if audit shows an understatement of at least 2% of Gross Sales for any month.
Source: Item 6 — OTHER FEES (FDD pages 16–20)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, a Successor Fee is required if a franchisee meets the conditions to be granted an additional term once the current term of their Franchise Agreement expires. The Successor Fee is 50% of the then-current Initial Franchise Fee. This fee is due at the time of signing the Successor Franchise Agreement.
In simpler terms, if a City Wide franchisee wants to renew their franchise agreement for another term, they will need to pay this Successor Fee. This fee compensates City Wide for the continued use of its brand, systems, and support during the renewed term. It's important for prospective franchisees to understand this renewal cost, as it can be a significant expense.
Franchise agreements typically have a set term, and renewal is not always guaranteed. The franchisee must usually be in good standing and meet certain performance criteria to be eligible for renewal. The Successor Fee is a common practice in franchising, as it allows the franchisor to recoup some of its initial investment in establishing the franchise system and to ensure that franchisees are committed to the long-term success of the brand.