conditional

Is the enforcement of the Restraint Period for a Chatime franchise subject to state law?

Chatime Franchise · 2025 FDD

Answer from 2025 FDD Document

rst obtaining our written consent. These provisions are subject to state law. |

MDA: §7.2(2) Defined as a "Restraint Period" which is a period of
two years following the expiration or termination of
your Franchise Agreement in the "Restraint Area"
which is (i) your Territory, or (ii) any area within
twenty five miles of any Chatime Store. During the
Restraint Period, you and any guarantors will not (i)
engage or be concerned or interested in any business
within the Restraint Area that supplies products or
services the same or similar to those at any time
supplied by your franchise business or that could be
reasonably regarded as a market competitor of the
Chatime network or
any Store, (ii) canvass or solicit
any person who was a customer, employee, or
prospective franchisee of ours in the twelve months
prior
to
the
termination
or
expiration
of
your
MDA,
or
(iii)
employ
any
person
who
was
employed
by
us
or
any
other franchisee without first obtaining our written
consent. These provisions shall not apply to your
continued operation
of individual Chatime Stores under
valid Franchise Agreements which have not been
terminated
and
are
not
in
default.
These
provisions
are
subject
to
state
law

| s.

Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 43–52)

What This Means (2025 FDD)

According to Chatime's 2025 Franchise Disclosure Document, the enforcement of the Restraint Period is subject to state law. The Restraint Period, as defined in the Multi-Unit Development Agreement (MDA), is a two-year period following the expiration or termination of the Franchise Agreement within the Restraint Area. The Restraint Area includes the franchisee's territory or any area within twenty-five miles of any Chatime store.

During this Restraint Period, the franchisee and any guarantors are restricted from engaging in any business within the Restraint Area that supplies similar products or services to Chatime, soliciting Chatime's customers, employees, or prospective franchisees from the past twelve months, or employing anyone who was employed by Chatime or any other franchisee without written consent. However, these restrictions do not apply if the franchisee continues to operate individual Chatime stores under valid Franchise Agreements that have not been terminated and are not in default.

The fact that these provisions are subject to state law means that the enforceability and specific terms of the Restraint Period can vary depending on the state in which the Chatime franchise operates. Some states may have stricter regulations regarding non-compete agreements, potentially limiting the scope or duration of the restrictions. Prospective franchisees should consult with legal counsel to understand how state law may affect the enforceability of the Restraint Period in their specific location.

This consideration is crucial for franchisees as it directly impacts their ability to pursue other business ventures after their franchise agreement expires or is terminated. Understanding the state-specific regulations can help franchisees make informed decisions about their future business plans and avoid potential legal issues related to non-compete clauses.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.
All Chatime 2025 FAQs Ask FDD Ninja