Can City Wide unilaterally reduce the scope of the non-compete agreement?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee understands and acknowledges that CITY WIDE will have the right, in its sole and absolute discretion, to reduce the scope of any covenant set forth in Paragraphs 3 and 4 in this Non-Compete Agreement, or any portion thereof, without Franchisee's consent, effective immediately upon receipt by Franchisee of written notice thereof, and Franchisee will comply forthwith with any covenant as so modified, which will be fully enforceable notwithstanding any contrary provisions of the Franchise Agreement, if any.
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 reduce the scope of the non-compete agreement without the franchisee's consent.
Specifically, City Wide can modify the non-compete agreement by reducing the scope of the covenants outlined in Paragraphs 3 and 4 of the agreement. This modification can be made at City Wide's "sole and absolute discretion" and becomes effective immediately once the franchisee receives written notice. The franchisee is then obligated to comply with the modified covenant, regardless of any conflicting provisions in the Franchise Agreement.
This clause gives City Wide significant flexibility to adjust the non-compete terms as they see fit, which could be beneficial or detrimental to the franchisee depending on the specific changes made. For example, City Wide might reduce the geographic area covered by the non-compete, allowing the franchisee more freedom to operate in nearby markets after the franchise agreement ends. However, franchisees should be aware that City Wide has the power to change these terms without their explicit approval.
Prospective franchisees should carefully consider this provision and discuss with City Wide the circumstances under which they might exercise this right to modify the non-compete agreement. Understanding City Wide's potential motivations and typical practices can help a franchisee assess the potential impact on their future business activities.