What event releases the guarantor from the continuing security guarantee and indemnity for a Chatime franchise?

According to Chatime's 2025 Franchise Disclosure Document, the guarantee and indemnity provided by the guarantor is a continuing security that remains in full force until Chatime issues a final release. This means that the guarantor's obligations persist over time and are not automatically discharged by events like settlements of accounts. The guarantor remains liable until Chatime provides an explicit written release.

This "continuing security" clause is designed to protect Chatime from potential losses due to a franchisee's non-compliance with the franchise agreement. It ensures that Chatime can pursue the guarantor for any outstanding obligations of the franchisee, even if the franchisee's financial situation changes or the franchisee takes actions that might otherwise affect the guarantor's liability. The guarantor's obligations are tied to the franchisee's performance under the agreement, and the guarantor's liability continues until Chatime formally releases them.

Several events do NOT affect the guarantor's liability, including granting time extensions to the franchisee, releasing the franchisee, modifying the agreement, transferring the agreement, terminating the agreement, or disputes between the franchisee and Chatime. Even if the agreement is void or unenforceable, or if not all guarantors sign, the guarantor's liability remains. Similarly, payments later avoided by law do not discharge the guarantor's liability, restoring all parties to their original rights and obligations. Therefore, the guarantor should be aware that their commitment is ongoing and comprehensive, lasting until Chatime provides a final release.