Does the Chatime Franchise Agreement allow for enforcement, preservation, or exercise of any right under the agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- The language in Clause 25.9 of the Franchise Agreement, under the heading "Costs and Expenses," is hereby deleted in its entirety, and replaced with the following:
The prevailing party must pay or reimburse the non-prevailing party, on demand, for all of its Costs (including Legal Costs) in connection with or incidental to:
- (a) Any default by the Franchisee in observing or performing any of its obligations under this Agreement
- (b) Any termination of this Agreement; and
- (c) The contemplated, attempted or actual enforcement, preservation or exercise of any right under this Agreement including the obtaining by the Franchisor of any advice or
information as to its rights under this Agreement or otherwise arising from a breach of this Agreement by the Franchisee.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, the Franchise Agreement does allow for the enforcement, preservation, or exercise of any right under the agreement. Specifically, the North Dakota Amendment to the Chatime Franchise Agreement states that the prevailing party must pay or reimburse the non-prevailing party for all costs, including legal costs, related to the enforcement, preservation, or exercise of any right under the agreement. This includes costs incurred due to a franchisee's default, termination of the agreement, or the franchisor seeking advice on its rights due to a breach of the agreement by the franchisee.
This clause ensures that Chatime and its franchisees have legal recourse to protect their rights and interests as defined in the Franchise Agreement. It also outlines the financial responsibility for costs associated with legal actions, placing the burden on the non-prevailing party. This provision is particularly relevant in cases of disputes or breaches of contract, as it clarifies who is responsible for covering the legal expenses incurred during the enforcement process.
For a prospective Chatime franchisee, this means that if they are in breach of the Franchise Agreement, they may be responsible for covering Chatime's legal costs if Chatime takes action to enforce its rights. Conversely, if Chatime is in breach and the franchisee prevails in a legal dispute, Chatime would be responsible for covering the franchisee's legal costs. This clause incentivizes both parties to adhere to the terms of the agreement and seek amicable resolutions to disputes whenever possible to avoid incurring potentially significant legal expenses.