What information must Chatime include in the written notice of breach to the Defaulting Party?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor may terminate this Agreement if:
- (a) Developer or Guarantor (Defaulting Party) breaches any provision of this Agreement or any Collateral Agreement;
- (b) Franchisor gives to the Defaulting Party a written notice that:
- (i) Specifies the breach;
- (ii) Tells the Defaulting Party what Franchisor wants the Defaulting Party to do to remedy the breach;
- (iii) Gives the Defaulting Party a reasonable time (which can be any number of days between 3 days and 30 days) to remedy the breach; and
- (iv) States that Franchisor proposes to terminate this Agreement and the Franchise if the breach is not remedied within that time; and
- (c) The Defaulting Party does not remedy the breach within the time allowed by a notice issued under clause 13.3(1)(b).
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, if a Developer or Guarantor (referred to as the Defaulting Party) breaches the agreement, Chatime must provide a written notice that includes specific details. This notice must clearly state the exact nature of the breach that has occurred. Furthermore, the notice must outline the specific actions Chatime requires the Defaulting Party to take in order to correct or remedy the breach.
In addition to specifying the breach and the required remedy, Chatime's written notice must also provide a reasonable timeframe for the Defaulting Party to implement the necessary corrections. This timeframe can vary, ranging from a minimum of 3 days to a maximum of 30 days, depending on the nature and severity of the breach. Finally, the notice must explicitly state Chatime's intention to terminate the franchise agreement if the Defaulting Party fails to remedy the breach within the given timeframe.
This clause is important for prospective franchisees as it outlines the process Chatime will follow if the franchisee fails to meet the obligations set forth in the franchise agreement. Franchisees should pay close attention to these requirements to understand their rights and responsibilities in the event of a breach, and the steps they can take to avoid termination of the agreement. Understanding these conditions allows a franchisee to be aware of the possible ramifications of not adhering to the franchise agreement and what steps can be taken to resolve issues.