What geographic area is covered by the Restraint Area for a Chatime franchise after termination or expiration?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
| 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 |
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, the Restraint Area defines the geographic scope of the non-compete obligations that a franchisee must adhere to after the franchise agreement expires or is terminated. This Restraint Area is in effect for a period defined as the "Restraint Period", which lasts for two years.
The Restraint Area is defined as either (i) the franchisee's Territory, or (ii) any area within twenty-five miles of any Chatime store. During the two-year Restraint Period, the franchisee and any guarantors are prohibited from engaging in any business within the Restraint Area that offers products or services similar to those supplied by the Chatime franchise or that could be considered a competitor to the Chatime network or any Chatime store.
Additionally, the franchisee is restricted from soliciting or canvassing any person who was a customer, employee, or prospective franchisee of Chatime within the twelve months prior to the termination or expiration of the Franchise Agreement. The franchisee is also prohibited from employing any person who was employed by Chatime or any other franchisee without obtaining written consent from Chatime. These restrictions do not apply if the franchisee continues to operate individual Chatime stores under valid Franchise Agreements that have not been terminated and are not in default. It is important to note that these provisions are subject to state law, which may impose additional limitations or requirements.