If a breach is remedied within the time allowed by Chatime, can Chatime still terminate the agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
15.3 Termination by Franchisor
- (1) Franchisor may terminate this Agreement if:
- (a) Franchisee or Guarantor (Defaulting Party) breaches any provision of this Agreement or any Collateral Agreement;
- (b) Franchisor gives to the Defaulting Party a written notice that:
- (i) Specifies the breach;
- (ii) Tells the Defaulting Party what Franchisor wants the Defaulting Party to do to remedy the breach;
- (iii) Gives the Defaulting Party a reasonable time (which can be any number of days between 3 days and 30 days) to remedy the breach; and
- (iv) States that Franchisor proposes to terminate this Agreement and the Franchise if the breach is not remedied within that time; and
- (c) the Defaulting Party does not remedy the breach within the time allowed by a notice issued under clause 15.3(1)(b).
- (2) If the breach is remedied in accordance with, and within the time allowed by, a notice issued under clause 15.3(1)(b), Franchisor cannot terminate this Agreement because of that breach.
- (3) If Franchisee does not perform or observe any obligation under this Agreement Franchisor may, but does not have to, remedy that default. In doing so, Franchisor is entitled to rely on the power of attorney in clause 24.
- (4) Notwithstanding any other provision in this clause 15, Franchisor may terminate this Agreement immediately upon written notice to Franchisee if:
- (a) The Defaulting Party breaches any provision under clause 6 (Initial and Continuing Fees), 9.2 (No Other Business Interests) or 9.3 (Restraint Applies to Conduct in Any Capacity).
- (b) A force majeure event (as referred to in clause 23) continues for more than 180 days;
- (c) Franchisee no longer holds a license that Franchisee must hold to carry on The Franchised Business;
- (d) Franchisee voluntarily abandons The Franchised Business;
- (e) Franchisee or a Guarantor is convicted of a serious offense;
- (f) The Franchised Business is operated in a way that endangers public health or safety;
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if a franchisee remedies a breach within the time frame outlined in the notice provided by Chatime, Chatime cannot terminate the agreement due to that specific breach. Chatime's notice to the franchisee must specify the breach, detail the actions required to remedy it, provide a reasonable timeframe for the remedy (between 3 and 30 days), and state Chatime's intent to terminate the agreement if the breach is not resolved within that timeframe.
This clause protects the franchisee from termination if they take appropriate and timely action to correct a breach. However, it's important to note that this protection applies only to the specific breach that was remedied. Chatime retains the right to terminate the agreement for other breaches or reasons as outlined in the franchise agreement.
It is also important to note that Chatime can terminate the agreement immediately if the franchisee breaches provisions related to initial and continuing fees, engaging in other business interests without approval, or violating conduct restrictions. These immediate termination rights exist regardless of any opportunity to remedy the breach. Therefore, franchisees must pay close attention to these specific obligations to avoid immediate termination.
This type of 'cure period' is standard in franchising, giving franchisees an opportunity to fix problems before facing termination. However, the specific terms and conditions, including the length of the cure period and the types of breaches that allow for immediate termination, can vary significantly between franchise systems. Prospective Chatime franchisees should carefully review the termination provisions in the franchise agreement with their legal counsel to fully understand their rights and obligations.