factual

Does the Chatime Franchise Agreement contain provisions regarding renewal, termination, transfer and dispute resolution?

Chatime Franchise · 2025 FDD

Answer from 2025 FDD Document

[Item 17: Renewal, Termination, Transfer, and Dispute Resolution]

Provision Section in Franchise Summary
Agreement (FA) and Multi-Unit Development Agreement (MDA)
a. Length of the FA: §1.1(27) The term is ten years.
franchise term
MDA: §1.1(34) The period ending the end date of the agreed Development Period. .
b. Renewal or extension of the term FA: §1.1(40); §2.6 At the end of the initial term of your Franchise Agreement, we may grant you the option to continue operating as a franchisee in your Territory and to enter into a new Franchise Agreement for a renewal term of ten years.
MDA: § 2.7 At the end of the initial term of your Franchise Agreement, you may request to enter into an additional term of ten years under the terms of our then-current form of multi-unit development agreement, which may contain different terms
u. Dispute resolution by arbitration or mediation §16 Except as otherwise provided, all disputes and claims relating to your Franchise Agreement or the relationship of the parties must be settled by mediation or arbitration in New York in accordance with the rules of the American Arbitration Association (“AAA”) mediation and arbitration service. These provisions are subject to state law.
MDA: §14 Except as otherwise provided, all disputes and claims relating to your MDA or the relationship of the parties must be settled by mediation or arbitration in New York in accordance with the rules of the AAA mediation and arbitration service. These provisions are subject to state law
v. Choice of forum §16 Arbitration in New York in accordance with the rules of the AAA service. These provisions are subject to state law.
MDA: §14 Arbitration in New York in accordance with the rules of the AAA service. These provisions are subject to state law.
w. Choice of law §25.1 Delaware law. These provisions are subject to state law.
MDA: §23.16 Delaware law. These provisions are subject to state law
d. Termination by franchisee FA: §15.1; §15.2 You may terminate your Franchise Agreement if (i) you give us written notice of termination within seven days after execution, or (ii) you are in substantial compliance with the Franchise Agreement, we materially breach the Franchise Agreement, you notify us of such breach and give us at least 60 days to remedy the breach, we do not timely remedy the breach or we fail to show continuing efforts to correct the breach, and you provide 60 days' written notice of termination. These provisions are subject to state law.
MDA: § 13.1 and 13.2 You may terminate your MDA if (i) you give us written notice of termination within seven days after execution, or (ii) you are in substantial compliance with the MDA, we materially breach the MDA, you notify us of such breach and give us at least 60 days to remedy the breach, we do not timely remedy the breach or we fail to show continuing efforts to correct the breach, and you provide 60 days' written notice of termination. These provisions are subject to state law.
e. Termination by franchisor without FA: Not applicable Not applicable.
"cause" MDA: Not applicable Not applicable
f. Termination by franchisor with "cause" FA: §15.3 We have the right to terminate your Franchise Agreement with cause. Depending upon the reason for termination, we may not provide you with an opportunity to cure.
MDA: § 13.3 We have the right to terminate your MDA with cause. Depending upon the reason for termination, we may not provide you with an opportunity to cure.
g. Curable defaults FA: §15.3(1) All defaults must be cured within 30 days after notice.
MDA: § 13.3(1) All defaults must be cured within 30 days after notice.
h. n-curable defaults FA: §15.3(4) We may terminate your Franchise Agreement immediately upon written notice to you if (i) you or a guarantor breach any provision under Clauses 6, 9.2, or 9.3 of your Franchise Agreement, (ii) a force majeure event continues for more than 180 days, (iii) you no longer hold a license required to carry on your franchise business, (iv) you voluntarily abandon your franchise business, (v) you or a guarantor are convicted of a serious offense, (vi) your operations endanger public health or safety, (vii) you are fraudulent in connection with your operations or commit a fraud upon us, or (viii) you voluntarily petition in bankruptcy, are adjudicated a bankrupt or insolvent, or a receiver, manager, liquidator, or other person is appointed for a substantial part of your assets.
----------------------------- ------------------ -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
MDA: §13.3(4) We may terminate your MDA immediately upon written notice to you if (i) you or a guarantor breach any provision under Clauses 6, 7.2, or 7.3 of your MDA, (ii) a force majeure event continues for more than 180 days, (iii) you no longer hold a license required to carry on your franchise business, (iv) you voluntarily abandon your multi-unit development business, (v) you or a guarantor are convicted of a serious offense, (vi) your operations endanger public health or safety, (vii) you are fraudulent in connection with your operations or commit a fraud upon us, or (viii) you voluntarily petition in bankruptcy, are adjudicated a bankrupt or insolvent, or a receiver, manager, liquidator, or other person is appointed for a substantial part of your assets.
i. Franchisee's obligations on termination/non-renewal FA: §17 Upon expiration or termination of your Franchise Agreement, you will immediately (i) cease directly or indirectly identifying yourself as a current or former franchisee, (ii) deliver to us all copies of the Operations Manual and Global Policies and Procedures, all forms of stationery, business cards, all advertising materials, original and all copies of databases and supplier lists, and all other property of ours, (iii) discontinue and forever cease use of the System name, the Trademarks, any trade name, trademark, or commercial symbol that suggests any association with us, and any of our confidential information and other Intellectual Property, (iv) remove all signage containing any of our trademarks or any marks deceptively similar to them, (v) execute all documents we require to transfer, assign, or cancel any trademarks, service marks, domain
names, or other commercial symbols or intellectual
property you applied for registration for or registered,
(vi)
provide us with all records, files, and other
materials we require pertaining to your Franchise
Agreement,
and
(vii)
pay
all
unpaid
monies
owed
to
us
or
any
affiliate
within
ten
business
days.
MDA: § 15 Upon expiration or termination of your MDA, you will immediately (i) cease directly or indirectly identifying yourself as a current or former developer, (ii) ) pay all unpaid monies owed to us or any affiliate within ten business days, and (iii) cease all development efforts.
j. Assignment of contract by franchisor FA: §12 We may transfer any of our rights, interests, obligations, or liabilities under your Franchise Agreement to any person or entity. Upon transfer, we will have no further obligation under your Franchise Agreement except for any accrued liabilities.
MDA: §10 We may transfer any of our rights, interests, obligations, or liabilities under your MDA to any person or entity. Upon transfer, we will have no further obligation under your MDA except for any accrued liabilities.
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
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

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, Item 17 addresses renewal, termination, transfer, and dispute resolution pertaining to both the Franchise Agreement (FA) and the Multi-Unit Development Agreement (MDA). The initial franchise term is ten years, as detailed in FA §1.1(27). Chatime may grant the franchisee an option to renew for an additional ten years under a new Franchise Agreement, as outlined in FA §1.1(40); §2.6.

Regarding termination, a franchisee can terminate the Franchise Agreement within seven days of execution or if Chatime materially breaches the agreement and fails to remedy it after 60 days' notice, according to FA: §15.1; §15.2. Chatime has the right to terminate the Franchise Agreement with cause, and the opportunity to cure defaults depends on the reason for termination, as stated in FA: §15.3. All defaults must be cured within 30 days after notice per FA: §15.3(1). However, certain defaults, such as breaching specific clauses, force majeure events lasting over 180 days, or bankruptcy, allow Chatime to terminate the agreement immediately upon written notice, as noted in FA: §15.3(4).

Upon termination or expiration, the franchisee must cease using Chatime's branding, return all materials, and pay all outstanding monies within ten business days, as per FA: §17. Chatime can transfer its rights and obligations under the Franchise Agreement to any person or entity, after which Chatime has no further obligation except for accrued liabilities, according to FA: §12.

For dispute resolution, all disputes must be settled through mediation or arbitration in New York, following the rules of the American Arbitration Association (AAA), as stated in §16. Delaware law governs the Franchise Agreement, as indicated in §25.1. A "Restraint Period" of two years following termination restricts the franchisee from engaging in similar businesses within the territory or within twenty-five miles of any Chatime store, as defined in MDA: §7.2(2).

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