What is a 'Collateral Agreement' in the context of a Chatime franchise?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
le;
- (b) Meets Franchisor's standards and specifications;
- (c) Operates under the Marks and the System; and
- (d) Is operated pursuant to a valid franchise agreement.
- (12) Collateral Agreement means any agreement between Franchisor and Franchisee or any agreement between Franchisee and an Affiliate of Franchisor in connection with this Agreement and The Franchised Business.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, a Collateral Agreement refers to any agreement between Chatime and a franchisee, or any agreement between a franchisee and an affiliate of Chatime, that is connected to the Franchise Agreement and the franchised business. This definition is important for prospective franchisees to understand, as these agreements are legally binding and can impact their rights and obligations.
Chatime emphasizes the importance of complying with all terms and conditions outlined in any Collateral Agreement. A breach of any Collateral Agreement is considered a breach of the main Franchise Agreement. This means that if a franchisee violates the terms of a Collateral Agreement, Chatime has the right to take action, potentially including termination of the franchise agreement.
Several clauses within the Chatime Franchise Agreement reference the Collateral Agreement, highlighting its significance. For instance, a franchisee must not be in default under the Franchise Agreement or any Collateral Agreement when seeking consent to assign their franchise to a new owner. Similarly, the franchisee is required to indemnify Chatime and its affiliates against losses or liabilities resulting from a breach of the Franchise Agreement or any Collateral Agreement. These stipulations underscore the necessity for franchisees to fully understand and adhere to all Collateral Agreements associated with their franchise.