factual

For a Chatime franchise, what is the timeframe prior to termination or expiration during which soliciting customers is prohibited?

Chatime Franchise · 2025 FDD

Answer from 2025 FDD Document

first 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. Modification of agreement §25.13 Your Franchise Agreement may only be modified by the parties in writing.
MDA: §23.12 Your MDA may only be modified by the parties in writing.
t. Integration/merger clause §25.12 Only the terms of your Franchise Agreement are binding. Any representations or promises outside of this FDD and your Franchise Agreement may not be enforceable. This provision is subject to state law.

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, franchisees are restricted from soliciting customers for a period of twelve months prior to the termination or expiration of their Franchise Agreement. This restriction is part of a broader set of non-compete obligations that extend both during the term of the agreement and for a period after termination or expiration.

Specifically, the FDD defines a "Restraint Period" that includes not only restrictions on engaging in competing businesses but also on soliciting customers, employees, or prospective franchisees. This Restraint Period lasts for two years following the end of the Franchise Agreement and applies within the franchisee's territory or within twenty-five miles of any Chatime store. The restriction on soliciting applies to individuals who were customers, employees, or prospective franchisees within the twelve months leading up to the termination or expiration.

This means that for a full year before the end of the franchise term, a franchisee must be careful not to take any actions that could be construed as soliciting business away from Chatime in anticipation of opening a competing business. This could include subtly advertising a future competing venture or directly contacting customers with offers that would be fulfilled after the franchise term ends. The consequences of violating these non-compete covenants could include legal action from Chatime.

Prospective franchisees should carefully consider these restrictions and how they might impact their future business plans. It is important to understand the scope of the Restraint Area and the types of activities that could be considered solicitation. Franchisees should also be aware that these provisions are subject to state law, which may provide additional protections or limitations.

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.
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