Is Chatime considered a guarantor of the tenant's obligations under the lease?

According to Chatime's 2025 Franchise Disclosure Document, Chatime is generally not considered a guarantor or surety of the tenant's (franchisee's) obligations under the lease agreement. The Lease Addendum specifies that, despite any terms in any agreement, Chatime will not be construed as a guarantor for the franchisee's lease obligations. This means the landlord cannot seek payment from Chatime if the franchisee defaults on rent or other lease terms. This clause is designed to protect Chatime from being held liable for the financial responsibilities of its franchisees related to their leases.

However, there is an exception to this rule. If Chatime becomes the tenant by assignment of the lease or enters into a new lease with the landlord, Chatime will then be liable for all the tenant's obligations under the lease. This would occur if Chatime takes over the lease from the franchisee, either through an assignment or by creating a new lease agreement directly with the landlord. In such a case, Chatime assumes the responsibilities and liabilities of the tenant, including rent payments and adherence to all lease terms.

This distinction is important for prospective Chatime franchisees to understand. Generally, Chatime does not provide a financial guarantee for the lease, meaning the franchisee is solely responsible for fulfilling the lease obligations. However, franchisees should be aware of the conditions under which Chatime might assume the lease and, consequently, the associated liabilities. Franchisees should carefully review the Lease Addendum and discuss these provisions with Chatime to fully understand their obligations and Chatime's potential involvement in the lease agreement.