What is the range of days Chatime may give a franchisee to remedy a breach of the franchise agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
15.3 Termination by Franchisor
- (1) Franchisor may terminate this Agreement if:
- (a) Franchisee 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 15.3(1)(b).
- (2) If the breach is remedied in accordance with, and within the time allowed by, a notice issued under clause 15.3(1)(b), Franchisor cannot terminate this Agreement because of that breach.
- (3) If Franchisee does not perform or observe any obligation under this Agreement Franchisor may, but does not have to, remedy that default. In doing so, Franchisor is entitled to rely on the power of attorney in clause 24.
- (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).
- (b) A force majeure event (as referred to in clause 23) continues for more than 180 days;
- (c) Franchisee no longer holds a license that Franchisee must hold to carry on The Franchised Business;
- (d) Franchisee voluntarily abandons The Franchised Business;
- (e) Franchisee or a Guarantor is convicted of a serious offense;
- (f) The Franchised Business is operated in a way that endangers public health or safety;
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, if a franchisee breaches the franchise agreement, Chatime may provide a written notice specifying the breach and offering a period to remedy it. This period can range from 3 to 30 days. The notice will also state that Chatime intends to terminate the agreement if the breach is not resolved within the given timeframe. However, if the franchisee fixes the breach within the specified time, Chatime cannot terminate the agreement based on that particular breach.
This clause outlines the process Chatime follows before terminating a franchise agreement due to a franchisee's breach. It balances the franchisor's need to maintain brand standards and compliance with the franchisee's opportunity to correct any issues. The specific number of days offered to remedy the breach is at Chatime's discretion, falling within the 3 to 30-day range.
However, Chatime can terminate the agreement immediately with written notice if the franchisee breaches provisions related to initial and continuing fees, engaging in other business interests without approval, or violating the non-compete agreement. Immediate termination is also possible under certain other circumstances, including a prolonged force majeure event, loss of required licenses, voluntary abandonment of the business, conviction of a serious offense, or operation of the franchised business in a way that endangers public health or safety.
For prospective franchisees, it's crucial to understand the specific actions or omissions that could lead to a breach of contract and the potential consequences, including the possibility of termination. Franchisees should also be aware of the conditions under which Chatime can terminate the agreement immediately, without providing an opportunity to remedy the breach.