If a provision in the Chatime Franchise Agreement is unenforceable in one jurisdiction but not another, how does the severability clause apply?

According to Chatime's 2025 Franchise Disclosure Document, the severability clause addresses situations where a provision of the Franchise Agreement is unenforceable, illegal, or void in one jurisdiction but not in another. In such cases, the specific provision is severed, but only with respect to its operation within the jurisdiction where it is deemed unenforceable, illegal, or void. This means the rest of the agreement remains in effect in that jurisdiction, and the provision remains in effect in any other jurisdiction where it is enforceable.

For a prospective Chatime franchisee, this clause offers a degree of protection. If a specific term in the agreement is found to be invalid in their state due to local laws, that term will not invalidate the entire agreement. Instead, just that particular provision will be deemed inapplicable in that state, allowing the rest of the franchise agreement to remain in force. This can help ensure that the franchisee's rights and obligations are still governed by the remaining portions of the contract.

However, franchisees should be aware that this clause does not protect them from all unenforceable provisions. It only applies when a provision is unenforceable in a specific jurisdiction. If a provision is deemed unenforceable across all jurisdictions, the first part of the severability clause would apply, potentially leading to its removal from the entire agreement. Franchisees should seek legal counsel to understand the implications of specific provisions and how they might be affected by local laws.

It's also important to note that amendments to the standard agreement may exist for specific states, such as New York, Illinois, Maryland, and North Dakota, which could modify or supersede certain provisions to comply with local franchise laws. These amendments, as detailed in the FDD, take precedence over the standard agreement terms within those states. Therefore, franchisees should carefully review any state-specific amendments to understand their rights and obligations fully.