factual

If an agency requires amendments to the Chatime franchise agreement as a condition of approval or registration, what will the franchisor do?

Chatime Franchise · 2025 FDD

Answer from 2025 FDD Document

it F to the Franchise Disclosure Document (Acknowledgement Addendum to Franchise Agreement) is deleted. Franchisee and its principals are not required to complete and sign the Acknowledgement Addendum.

    1. No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.

MARYLAND AMENDMENT TO THE CHATIME FRANCHISE, LLC FRANCHISE AGREEMENT

In recognition of the requirements of the Maryland Franchise Registration and Disclosure Law, Md. Bus. Reg. Code Ann. §14-201 et seq., the parties to the attached Chatime Franchise, LLC Franchise Agreement (the "Franchise Agreement") agree as follows:

  1. Clauses 2.6(3)(h) and 26.2 of the Franchise Agreement, entitled "Options for New Term," and "Governing Law and Jurisdiction," will be amended by the addition of the following at the end of the clauses:

"The general release required as a condition of renewal, sale, and/or assignment/transfer shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law."

  1. Clause 16.3 of the Franchise Agreement is amended to add the following:

"This franchise agreement provides that disputes are resolved through arbitration. A Maryland franchise regulation states that it is an unfair or deceptive practice to require a franchisee to waive its right to file a lawsuit in Mayland claiming a violation of the Maryland Franchise Law. In light of the Federal Arbitration Act, there is some dispute as to whether this forum selection requirement is legally enforceable."

  1. Clause 25.12 of the Franchise Agreement, entitled "Entire Understanding," will be amended by the addition of the following at the end of the clause:

"Nothing in this Agreement or any other agreement is intended to disclaim Franchisor's representations in Franchisor's Franchise Disclosure Document."

  1. Clause 25.1 of the Franchise Agreement, entitled "Choice of Law," will be amended by the addition of the following at the end of the clause:

"Notwithstanding the above, Maryland franchisees are permitted to bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law."

    1. Clauses 20.1(1), (2), and (3), and 20.2(3) of the Franchise Agreement are deleted.
    1. No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in

connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.

  1. Each provision of this Amendment will be effective only to the extent that the jurisdictional requirements of the Maryland Franchise Registration and Disclosure Law, with respect to each such provision, are met independently of the Amendment. This Amendment will have no force or effect if such jurisdictional requirements are not met.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have duly executed, sealed, and delivered this Amendment to the Franchise Agreement on the same date as that on which the Franchise Agreement was executed.

CHATIME FRANCHISE, LLC FRANCHISEE
------------------------------ ------------
By: By:
Name: Name:
Title: Title:

MARYLAND AMENDMENT TO THE CHATIME FRANCHISE, LLC MULTI-UNIT DEVELOPMENT AGREEMENT

In recognition of the requirements of the Maryland Franchise Registration and Disclosure Law, Md. Bus. Reg. Code Ann. §14-201 et seq., the parties to the attached Chatime Franchise, LLC Multi-Unit Agreement (the "Multi-Unit Development Agreement") agree as follows:

    1. Clause 2.7(3)(h) of any Multi-Unit Development Agreement, will be amended by the addition of the following at the end of the clauses:
    • "The general release required as a condition of renewal, sale, and/or assignment/transfer shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law."
    1. Clause 14.3 of the Multi-Unit Development Agreement is amended to add the following:
    • "This franchise agreement provides that disputes are resolved through arbitration. A Maryland franchise regulation states that it is an unfair or deceptive practice to require a franchisee to waive its right to file a lawsuit in Mayland claiming a violation of the Maryland Franchise Law. In light of the Federal Arbitration Act, there is some dispute as to whether this forum selection requirement is legally enforceable."
    1. Clauses 18.1(1), (2) and (3), and 18.2(3) of the Multi-Unit Development Agreement are deleted.
    1. No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
    1. Each provision of this Amendment will be effective only to the extent that the jurisdictional requirements of the Maryland Franchise Registration and Disclosure Law, with respect to each such provision, are met independently of the Amendment. This Amendment will have no force or effect if such jurisdictional requirements are not met.

Source: Item 23 — Receipts (FDD pages 58–262)

What This Means (2025 FDD)

According to the 2025 Chatime Franchise Disclosure Document, several states require specific amendments to the standard franchise agreement to comply with their franchise laws. These amendments primarily address issues such as waivers of rights, choice of law, choice of forum, and termination conditions, ensuring that franchisees retain certain protections under state laws, specifically in Maryland, New York, and Illinois.

For example, in Maryland, the amendments ensure that general releases required for renewal, sale, or transfer do not waive liabilities under the Maryland Franchise Registration and Disclosure Law. Additionally, franchisees in Maryland retain the right to sue Chatime in Maryland for claims arising under the same law, regardless of the standard agreement's choice of forum clause. Similarly, New York's amendments ensure that franchisees' rights under Article 33 of the General Business Law are not waived, affecting provisions related to renewal, termination, and choice of law.

Illinois law governs the franchise agreement for Chatime locations within the state. The Illinois amendment specifies that any provision designating jurisdiction or venue outside of Illinois is void, although arbitration outside of Illinois is permitted. Furthermore, any attempt to waive compliance with the Illinois Franchise Disclosure Act is also void. These amendments collectively demonstrate Chatime's willingness to modify its standard agreement to meet state-specific regulatory requirements, which protects franchisees by ensuring compliance with local laws and regulations.

These state-specific amendments included in the Chatime FDD provide greater clarity and protection to franchisees by ensuring adherence to local regulations. Prospective franchisees should carefully review these amendments and understand how they impact their rights and obligations within their specific state. This proactive approach to compliance can foster a more transparent and equitable franchise relationship.

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.