If there is a conflict of laws, which law prevails in the Chatime franchise agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
it F to the Franchise Disclosure Document (Acknowledgement Addendum to Franchise Agreement) is deleted. Franchisee and its principals are not required to complete and sign the Acknowledgement Addendum.
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- No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
MARYLAND AMENDMENT TO THE CHATIME FRANCHISE, LLC FRANCHISE AGREEMENT
In recognition of the requirements of the Maryland Franchise Registration and Disclosure Law, Md. Bus. Reg. Code Ann. §14-201 et seq., the parties to the attached Chatime Franchise, LLC Franchise Agreement (the "Franchise Agreement") agree as follows:
- Clauses 2.6(3)(h) and 26.2 of the Franchise Agreement, entitled "Options for New Term," and "Governing Law and Jurisdiction," will be amended by the addition of the following at the end of the clauses:
"The general release required as a condition of renewal, sale, and/or assignment/transfer shall not apply to any liability under the Maryland Franchise Registration and Disclosure Law."
- Clause 16.3 of the Franchise Agreement is amended to add the following:
"This franchise agreement provides that disputes are resolved through arbitration. A Maryland franchise regulation states that it is an unfair or deceptive practice to require a franchisee to waive its right to file a lawsuit in Mayland claiming a violation of the Maryland Franchise Law. In light of the Federal Arbitration Act, there is some dispute as to whether this forum selection requirement is legally enforceable."
- Clause 25.12 of the Franchise Agreement, entitled "Entire Understanding," will be amended by the addition of the following at the end of the clause:
"Nothing in this Agreement or any other agreement is intended to disclaim Franchisor's representations in Franchisor's Franchise Disclosure Document."
- Clause 25.1 of the Franchise Agreement, entitled "Choice of Law," will be amended by the addition of the following at the end of the clause:
"Notwithstanding the above, Maryland franchisees are permitted to bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law."
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- Clauses 20.1(1), (2), and (3), and 20.2(3) of the Franchise Agreement are deleted.
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- No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in
connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, the franchise agreement is generally governed by the laws of Delaware. However, this is subject to certain exceptions and amendments based on the franchisee's location. For franchisees in specific states like Illinois, Maryland, Minnesota, and New York, the franchise agreement includes amendments that prioritize the laws of those states in certain situations to protect the franchisee's rights under local franchise laws.
For example, the Illinois amendment states that Illinois law governs the Multi-Unit Development Agreement and that any provision designating jurisdiction or venue outside of Illinois is void. Similarly, the New York amendment ensures that the choice of law does not waive any rights conferred upon the franchisee by Article 33 of the General Business Law of New York. The Maryland amendment allows franchisees to bring lawsuits in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law, regardless of the general choice of law provision.
These amendments mean that if a conflict arises between Delaware law and the franchise laws of Illinois, Maryland, Minnesota, or New York, the laws of those states will take precedence to protect the franchisee's rights under those specific state laws. This ensures that Chatime franchisees are not forced to waive their local legal protections through the standard franchise agreement. Prospective franchisees should carefully review the specific amendments applicable to their state to understand their rights and protections.