How long does a Chatime multi-unit developer have to cure defaults after notice?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
| g. Curable defaults | FA: §15.3(1) | All defaults must be cured within 30 days after notice. | | | MDA: § 13.3(1) | All defaults must be cured within 30 days after notice. | | h. n-curable defaults | FA: §15.3(4) | We may terminate your Franchise Agreement immediately upon written notice to you if (i) you or a guarantor breach any provision under Clauses 6, 9.2, or 9.3 of your Franchise Agreement, (ii) a force majeure event continues for more than 180 days, (iii) you no longer hold a license required to carry on your franchise business, (iv) you voluntarily abandon your franchise business, (v) you or a guarantor are convicted of a serious offense, (vi) your operations endanger public health or safety, (vii) you are fraudulent in connection with your operations or commit a fraud upon us, or (viii) you voluntarily petition in bankruptcy, are adjudicated a bankrupt or insolvent, or a receiver, manager, liquidator, or other person is appointed for a substantial part of your assets. | |-----------------------------|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | MDA: §13.3(4) | We may terminate your MDA immediately upon written notice to you if (i) you or a guarantor breach any provision under Clauses 6, 7.2, or 7.3 of your MDA, (ii) a force majeure event continues for more than 180 days, (iii) you no longer hold a license required to carry on your franchise business, (iv) you voluntarily abandon your multi-unit development business, (v) you or a guarantor are convicted of a serious offense, (vi) your operations endanger public health or safety, (vii) you are fraudulent in connection with your operations or commit a fraud upon us, or (viii) you voluntarily petition in bankruptcy, are adjudicated a bankrupt or insolvent, or a receiver, manager, liquidator, or other person is appointed for a substantial part of your assets.
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 43–52)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a multi-unit developer (MDA) has 30 days to cure defaults after receiving notice. This is outlined in Section 13.3(1) of the Multi-Unit Development Agreement. This means that if Chatime believes a multi-unit developer is not meeting the obligations of their agreement, they will provide written notice, and the developer then has a 30-day window to correct the issue.
It's important to note that not all defaults are curable. According to MDA Section 13.3(4), Chatime can terminate the MDA immediately upon written notice if certain events occur. These events include breaches of specific clauses related to confidentiality and non-competition, a force majeure event lasting over 180 days, loss of required licenses, voluntary abandonment of the multi-unit development business, conviction of a serious offense by the developer or a guarantor, endangering public health or safety, fraudulent activities, or bankruptcy-related events.
The distinction between curable and non-curable defaults is a critical aspect of the MDA. A prospective Chatime multi-unit developer should carefully review Sections 13.3(1) and 13.3(4) to fully understand their obligations and the potential consequences of failing to meet them. Understanding what constitutes a curable default versus a non-curable default is essential for managing risk and maintaining a good relationship with Chatime.
In the franchise industry, providing a cure period is a common practice, allowing franchisees an opportunity to rectify breaches before termination. The 30-day cure period offered by Chatime for certain defaults aligns with standard industry practices, but the specific terms and conditions should be carefully evaluated by potential franchisees in consultation with legal counsel.