Regarding Chatime, what warranty does the franchisee provide concerning the owners, directors, and officers of the franchisee at the time of executing the agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
All of the restrictions in this Agreement are intended to prevent: (i) the owners, members, shareholders, officer, directors, managers and employees of the Franchised Business from taking unfair advantage of the benefits that may be provided by a franchise for a Chatime Store Business; (ii) the misappropriation, misuse or unauthorised use of the Intellectual Property including the Business System or Confidential Information; and (iii) damage to the Network.
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.
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)
Based on the 2025 Chatime Franchise Disclosure Document, the franchisee provides a warranty that the owners, members, shareholders, officers, directors, managers, and employees of the Franchised Business will not take unfair advantage of the benefits provided by the franchise. This also includes a warranty against the misappropriation, misuse, or unauthorized use of Chatime's intellectual property, including the Business System or Confidential Information. The franchisee also warrants against causing damage to the Chatime Network.
This means that as a Chatime franchisee, you are responsible for ensuring that everyone associated with your business adheres to the franchise agreement and protects Chatime's interests. This responsibility extends to preventing any actions that could harm the brand's reputation, misuse confidential information, or infringe on intellectual property rights.
The FDD also states that damages may not be an adequate remedy if a person breaches the agreement, and Chatime may seek injunctive relief without posting a bond if a breach occurs or is threatened. This highlights the importance Chatime places on protecting its brand and system, and the legal actions it may take to enforce compliance. The franchisee must acknowledge that violating the agreement will cause irreparable harm to Chatime and the franchisee, and therefore, Chatime or the franchisee may seek an injunction to prevent violations.
Furthermore, any claim the franchisee might have against Chatime does not justify violating the agreement. This underscores the franchisee's ongoing obligation to comply with the franchise agreement, regardless of any disputes that may arise. The agreement is governed by the laws of Delaware, and any changes must be in writing and signed by the franchisee, franchisor, and the individual in question.