Can Chatime immediately terminate the agreement if the franchisee breaches the clause regarding restraint applies to conduct in any capacity?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (4) Notwithstanding any other provision in this clause 15, Franchisor may terminate this Agreement immediately upon written notice to Franchisee if:
- (a) The Defaulting Party breaches any provision under clause 6 (Initial and Continuing Fees), 9.2 (No Other Business Interests) or 9.3 (Restraint Applies to Conduct in Any Capacity).
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, Chatime can terminate the franchise agreement immediately if the franchisee breaches the clause regarding restraint applies to conduct in any capacity.
Specifically, Chatime can issue an immediate written notice of termination if the franchisee breaches any provision under clause 9.3, which addresses conduct in any capacity. This clause applies to the franchisee, any interested parties, and those acting in various capacities such as partners, agents, directors, employees, or financiers. It also extends to those acting as members, shareholders, trustees, consultants, or in any other capacity.
This means that if a Chatime franchisee, or anyone associated with them in any of the listed roles, violates the non-compete provisions, Chatime does not need to provide a notice and opportunity to cure the breach before terminating the agreement. This is a stricter standard than the typical termination process for other breaches, where the franchisee would generally receive a notice and a period of 3 to 30 days to remedy the issue before termination.