What happens if a Chatime Developer breaches any Collateral Agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
Developer must comply with all terms and conditions of any Collateral Agreement and acknowledges that a breach of any Collateral Agreement constitutes a breach of this Agreement.
(6) Developer:
(a) Gives to Franchisor all details of the proposed assignment including a copy of the applicable contract (which must comply with Franchisor's requirements) and any other agreements between Developer and the assignee.
Developer acknowledges that:
(3) Developer, both when seeking consent to the assignment and when the assignment is to occur, is not in default under this Agreement or any Collateral Agreement;
(d) A breach by Franchisee Parties of this Agreement or any Collateral Agreement;
(2) Franchisor's rights at law and under this Agreement, including its right to be indemnified under this clause, are not affected by:
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a breach of any Collateral Agreement by a Chatime Developer constitutes a breach of the Development Agreement itself. This means that the franchisor can pursue various remedies outlined in the Development Agreement.
Specifically, if the Developer is looking to assign their rights and obligations under the Development Agreement to someone else, the franchisor's consent can be withheld if the Developer is in default under any Collateral Agreement. This could prevent the Developer from selling their interest in the Chatime development business.
Additionally, the Franchise Disclosure Document outlines that the franchisor has the right to be indemnified against losses, liabilities, legal costs, and expenses resulting from a breach of the Development Agreement or any Collateral Agreement. This means the Developer may be responsible for covering any financial damages Chatime incurs due to the breach. Therefore, it is crucial for a prospective Chatime Developer to understand the terms of all Collateral Agreements and ensure full compliance to avoid potential legal and financial repercussions.