Regarding the franchise agreement for a Chatime franchise, what rights does the Franchisor have as a third-party beneficiary, specifically concerning the assumption of the franchisee's obligations?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
6. ENFORCEMENT
- (a) Franchisor is a third-party beneficiary of this Agreement and may enforce it, solely and/or jointly with the Franchisee. I am aware that my violation of this Agreement will cause the Franchisor and the Franchisee irreparable harm; therefore, I acknowledge and agree that the Franchisee and/or the Franchisor may apply for the issuance of an injunction preventing me from violating this Agreement, and I agree to pay to the Franchisee and the Franchisor all the costs it/they incur(s), including, without limitation, legal fees and expenses, if this Agreement is enforced against me.
- (b) Due to the importance of this Agreement to the Franchisee and the Franchisor, any claim I might have against the Franchisee or the Franchisor is a separate matter and does not entitle me to violate, or justify any violation of this Agreement.
- (c) This Agreement shall be construed under the laws of the State of Delaware. The only way this Agreement can be changed is in writing signed by both the Franchisee, Franchisor, and me.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, Chatime is a third-party beneficiary of the franchise agreement and has the right to enforce it either independently or in conjunction with the franchisee. This means Chatime has specific legal rights and can take action to ensure the terms of the agreement are upheld.
Specifically, the agreement states that any violation of the agreement will cause irreparable harm to both the franchisee and Chatime. Therefore, both the franchisee and Chatime can seek an injunction to prevent any violations of the agreement. Furthermore, if the agreement is enforced against a party, that party is responsible for covering all costs incurred, including legal fees and expenses, for both Chatime and the franchisee.
This clause emphasizes the importance of adhering to the franchise agreement and highlights the legal recourse available to Chatime to protect its interests and brand standards. It also clarifies that any claims a party might have against the franchisee or Chatime do not justify violating the agreement.