Regarding breaches of the Chatime agreement, is monetary damage considered an adequate remedy?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
5. DAMAGES NOT AN ADEQUATE REMEDY
I acknowledge and agree that without prejudice to any right or remedy available to the Franchisee or the Franchisor:
- (a) damages are not an adequate remedy if a person breaches this Agreement;
- (b) the Franchisee or the Franchisor may apply for and obtain, without the necessity
of posting a bond, injunctive relief if:
- (i) a person breaches or threatens to breach any provision of this Agreement; or
- (ii) it believes a person is likely to or threatening to breach any provision of this Agreement.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, monetary damages are not considered an adequate remedy for breaches of the franchise agreement. Chatime states that it may seek injunctive relief in the event of a breach or threatened breach of the agreement, without needing to post a bond. This means that Chatime can ask a court to order the franchisee to stop the behavior that constitutes the breach.
This clause emphasizes the importance Chatime places on franchisees adhering to the terms of the agreement. It also highlights that Chatime believes some violations could cause irreparable harm that money alone cannot fix. This is a fairly common clause in franchise agreements, as franchisors often need to protect their brand standards, trade secrets, and overall network integrity.
For a prospective Chatime franchisee, this means that any violation of the franchise agreement, no matter how small it may seem, could lead to legal action beyond just paying damages. It is critical to fully understand the terms of the agreement and adhere to them strictly to avoid potential injunctions, legal fees, and other costs associated with defending against a breach of contract claim. Franchisees should seek legal counsel to fully understand their obligations and the potential consequences of non-compliance.