What happens if a Chatime franchisee is fraudulent in connection with the operation of The Franchised Business?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: Receipts]
- (g) Franchisee is fraudulent in connection with the operation of The Franchised Business;
- 15.4 Other Remedies. In the event of grounds for a default by the Franchisee, Franchisor is entitled in its sole discretion to exercise any other remedies in lieu of or prior to terminating the Agreement, which may include but are not limited to termination or suspension of any and all services provided to Franchisee by Franchisor, its Affiliates, or approved suppliers; suspension of delivery of product or supplies to Franchisee by Franchisor, its Affiliates, or approved suppliers; imposition of different credit terms for delivery of product or supplies to Franchisee by Franchisor, its Affiliates or approved suppliers; temporary operation of the Franchised Business pursuant to Section 14 of this Agreement; removal of Franchisee from the Franchisor's website, directory, or social media; execution and delivery of a Release in the form attached as Exhibit 1, and imposition of any additional or different requirements for Franchisee to maintain its right to continue operating the Franchised Business. Franchisor's exercise of any of these other remedies shall not in any way impair or waive Franchisor's right in the future to terminate the Agreement or to exercise any other rights under this Agreement.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if a franchisee engages in fraudulent activities related to their Chatime business, it constitutes grounds for default. In such a case, Chatime has the discretion to pursue various remedies instead of, or before, terminating the franchise agreement.
These remedies may include terminating or suspending any services provided to the franchisee by Chatime, its affiliates, or approved suppliers. Chatime could also suspend the delivery of products or supplies, impose different credit terms, or temporarily operate the franchised business. Additionally, Chatime may remove the franchisee from their website, directory, or social media, require the franchisee to sign a release, and impose additional requirements for the franchisee to maintain their right to continue operating the business.
It's important to note that Chatime's decision to exercise any of these remedies does not prevent them from terminating the agreement or exercising any other rights they have under the agreement in the future. This means that even if Chatime initially chooses a less severe action, they can still decide to terminate the franchise agreement later on if they deem it necessary.