In the event of invalidity, what combination of Restraint Area, Restraint Period, and Restrained Business remains in force for a Chatime franchise?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) I acknowledge and agree with the Franchisor that if any of the rights of the Franchisee or Franchisor resulting from the interpretation of this Agreement are in any way invalid or unenforceable, then such invalidity or unenforceability shall not prejudice or in any way affect the validity or enforceability of the remainder of this Agreement and the invalid or unenforceable part shall be severed from this Agreement and, for the purposes of this Agreement, the next geographically largest, temporally longest and most expansive with regard to subject matter combination of the Restraint Area, Restraint Period and Restrained Business remains in force.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if any part of the agreement concerning the restraint area, restraint period, or restrained business is deemed invalid or unenforceable, the remaining parts of the agreement will still be in effect. Specifically, the next geographically largest, temporally longest, and most expansive combination of these three elements will remain in force.
In practical terms, this means that if a specific restriction is found to be too narrow or limited, a broader restriction will automatically apply. For example, if a 10-mile non-compete radius is deemed unenforceable, a 25-mile radius might then be enforced instead, assuming it is defined elsewhere in the agreement. Similarly, if a one-year restraint period is challenged, a two-year period could take its place if that is the next longest duration specified.
This provision protects Chatime by ensuring that some form of non-compete agreement remains in place, even if the initial terms are disputed. It also means that franchisees need to be aware of the full scope of potential restrictions, as the enforceable terms could expand if a challenge to a narrower term is successful. Franchisees should carefully review the definitions of 'Restraint Area,' 'Restraint Period,' and 'Restrained Business' within their franchise agreement to understand the maximum potential limitations.