If any rights resulting from the interpretation of the Chatime agreement are invalid, what happens to the remainder of the agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
(b) I acknowledge and agree with the Franchisor that if any of the rights of the Franchisee or Franchisor resulting from the interpretation of this Agreement are in any way invalid or unenforceable, then such invalidity or unenforceability shall not prejudice or in any way affect the validity or enforceability of the remainder of this Agreement and the invalid or unenforceable part shall be severed from this Agreement and, for the purposes of this Agreement, the next geographically largest, temporally longest and most expansive with regard to subject matter combination of the Restraint Area, Restraint Period and Restrained Business remains in force.
(c) I acknowledge and agree that each of the restrictions contained in this Agreement (i) is reasonable as to period, territorial limitation and subject matter; (ii) the restrictions in this Agreement are intended to help protect or preserve the Franchisee's and the Franchisor's legitimate business interests, including: (A) the Franchisor's relationship with other Franchisees; (B) the investment of the Franchisee in developing the Franchised Business and training its employees; (C) the investment of the Franchisor and its Affiliates in developing the Business System and training its Franchisees; (C) the revenue earned from the business conducted by the Franchisor and members of the Network; (D) the goodwill of the Franchised Business and the Franchisor; (E) the goodwill of other Chatime Store Businesses; (F) the ability for the Franchisor to appoint any person to operate the Franchised Business; and (iii) confers a benefit on the Franchisee and the Franchisor which is no more than that which is reasonably and necessarily required by the Franchisor for the maintenance and protection of the Franchisee and the Franchisor, the members of the Network, and the Business System.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if any rights of the Franchisee or Franchisor resulting from the interpretation of the agreement are deemed invalid or unenforceable, the remaining provisions of the agreement will still be valid and enforceable. The invalid or unenforceable part will be removed from the agreement. The agreement will then be interpreted by using the next geographically largest, temporally longest, and most expansive combination of the Restraint Area, Restraint Period, and Restrained Business, which will remain in force. This is known as a severability clause.
This clause ensures that the entire agreement does not become void due to a single invalid provision. It allows the franchise relationship to continue under the remaining valid terms. This is a common practice in franchise agreements to protect the interests of both the franchisor and franchisee.
The franchisee acknowledges that the restrictions within the agreement are reasonable in terms of period, territorial limitation, and subject matter. These restrictions are designed to protect the legitimate business interests of both the franchisee and Chatime, including their relationships with other franchisees, investments in developing the franchised business and the Business System, revenue, and goodwill. The franchisee agrees that these restrictions confer a benefit that is reasonably necessary for the maintenance and protection of the franchisee, Chatime, the network members, and the Business System.