If a Chatime franchisee is a trustee, are they bound personally, in their capacity as a trustee, or both?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
The agreement by Developer Parties in clause 7.2 applies to any of them, the Interested Parties, and those acting:
- (1) In partnership or association with another person;
- (2) As principal, agent, representative, director, officer, employee, or financier;
- (3) As member, shareholder, debenture holder, note holder, or holder of any other security;
- (4) As trustee of or as a consultant or adviser to any person; or
- (5) In any other capacity.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the non-compete agreement applies to individuals acting in various capacities, including as a trustee. Specifically, clause 7.3 states that the non-compete applies to those acting as a trustee to any person. This means that if a Chatime franchisee is also a trustee, the restrictions on competitive activities apply to them in that role.
This has significant implications for a prospective Chatime franchisee who also serves as a trustee. They must ensure that their activities as a trustee do not conflict with the non-compete obligations outlined in the franchise agreement. This could limit their ability to engage with or advise businesses that are considered "Restrained Businesses" as defined in the agreement.
The agreement also emphasizes that these restrictions are severable and apply independently. This means that even if one part of the restriction is deemed unenforceable, the other parts, including the application to trustees, remain in effect. Therefore, a Chatime franchisee cannot circumvent the non-compete obligations by arguing that their actions are solely in their capacity as a trustee and not personally. The franchisee must ensure compliance in all capacities to avoid breaching the franchise agreement.