What page number in the Chatime Franchise Agreement discusses Protection of Goodwill for a Chatime franchise?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
9 Protection of Goodwill
9.1 Acknowledgements and Restriction
Franchisee Parties acknowledge that:
- (1) The System used in connection with Franchisee's conduct of The Franchised Business, the Marks, the Raw Materials and other Products is unique and has been developed by Franchisor at great effort and expense;
- (2) Franchisor has considerable and recognized goodwill in the conduct of its business of developing and promoting the System;
- (3) Franchisor should be entitled to protect that goodwill for its own benefit by restricting
Franchisee's and Guarantor's ability to damage that goodwill by competing with Franchisor; and
(4) Each of the restraints imposed upon Franchisee and Guarantor under clause 9.2 is fair and reasonable and is no greater than is reasonably necessary to protect this goodwill.
9.2 No Other Business Interests
Franchisee Parties jointly and severally agree with Franchisor that neither Franchisee nor any Guarantor will:
- (1) During the Initial Term or any New Term finance, invest in or have a financial interest in any business other than the Franchised Business without the prior written consent of Franchisor; or
- (2) During the Restraint Period, in the Restraint Area, directly or indirectly do any of the following things:
- (a) be concerned or interested in any Restrained Business (directly or indirectly, or through any interposed corporate entity, trust, partnership, or entity as trustee, principal, agent, shareholder, beneficiary, or as an independent contractor, consultant, adviser or in any other capacity);
- (b) advise, assist, consult with or for or in connection with any Restrained Business or any person associated with or in any manner whatsoever connected to or engaged by or in connection with any Restrained Business;
- (c) hold or own (beneficially or non-beneficially) whether directly or indirectly and whether absolutely or contingently or hold options over shares or any other securities or units of any entity engaging in a Restrained Business; and
- (d) procure, employ, seek to employ or engage, or appoint in any capacity (whether as a consultant, director or otherwise), any person who is or has been in the 12 months prior to such action an employee, independent contractor, or prospective franchisee of the Franchisor, its affiliates, or any Chatime Store Business.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
The 2025 Chatime Franchise Disclosure Document includes details regarding the protection of goodwill in section 9 of the franchise agreement. Specifically, section 9.1 outlines acknowledgements and restrictions related to the goodwill associated with Chatime's system, marks, raw materials, and products, noting that these have been developed by the franchisor. It emphasizes the franchisor's entitlement to protect its goodwill by restricting the franchisee's ability to damage it through competition. Section 9.1(4) states that the restraints imposed on the franchisee and guarantor are fair, reasonable, and no greater than necessary to protect this goodwill.
Section 9.2 of the Chatime franchise agreement further details restrictions on the franchisee and guarantor, preventing them from engaging in other business interests during the initial or any new term without the franchisor's consent. Additionally, during the restraint period and within the restraint area, the franchisee and guarantor are prohibited from involvement in any restrained business, including providing advice or assistance, holding ownership in entities engaged in such businesses, or employing individuals associated with the franchisor or other Chatime stores.
These measures are designed to protect Chatime's brand reputation and market position by preventing franchisees from using the franchisor's confidential information and business system to compete against the franchisor, either during the franchise term or for a specified period afterward. Prospective franchisees should carefully review these sections to understand the full scope of these restrictions and their obligations to protect Chatime's goodwill.