If a Chatime Developer terminates the Development Agreement within the cooling-off period, what percentage of the Development Fee will be retained by the Franchisor to cover reasonable costs?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
ng done by Franchisor while it operates and manages the Development Business in accordance with this clause 12, except for acts or omissions arising from the gross negligence or willful misconduct of Franchisor. Developer indemnifies Franchisor and its employees and agents against all damages, sums of money, costs, charges, expenses, actions, claims, liabilities, injuries and demands made against or suffered by Franchisor, its employees and agents for the period Franchisor operates and manages the Development Business pursuant to this clause 12.
13 Termination of Agreement
13.1 Developer May Terminate During Cooling Off Period
- (1) Developer may terminate this Agreement by giving written notice to Franchisor within 7 days of the date of this Agreement.
- (2) If Developer terminates this Agreement in accordance with clause 13.1(1), Franchisor must, within 14 days after receiving the notice of termination, return all payments (whether of money or other valuable consideration) made by Developer to Franchisor under this Agreement less the
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a Chatime Developer has the right to terminate the Development Agreement by providing written notice to Chatime within 7 days of the agreement's date. This is commonly referred to as a cooling-off period, which allows the franchisee to reconsider their decision shortly after signing the agreement.
If the Chatime Developer terminates the agreement within this 7-day cooling-off period, Chatime is obligated to return all payments made by the Developer, whether in the form of money or other valuable consideration. However, Chatime will deduct certain amounts to cover its reasonable costs associated with granting the agreement. Specifically, Chatime will retain 20% of the Development Fee to cover the costs related to the selection and induction of the Developer.
In addition to the 20% of the Development Fee, Chatime will also retain $5,000 to cover the costs associated with the instructions for, negotiation, preparation, and execution of the Development Agreement and any related collateral agreements. Chatime will also deduct all reasonable costs connected to the training of the Developer, including any payments made to the Developer by Chatime during the training period. This means that the franchisee will not get a full refund of all costs paid.