Can Chatime require a Chatime franchisee to execute and deliver a Release as a remedy for a default?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
NORTH DAKOTA AMENDMENT TO THE CHATIME FRANCHISE, LLC FRANCHISE AGREEMENT
In recognition of the requirements of North Dakota Century Code ("NDCC") §51-19-09, the parties to the attached Chatime Franchise, LLC Franchise Agreement (the "Franchise Agreement") and, if applicable, the attached Chatime Franchise LLC Multi-Unit Development Agreement ("Multi-Unit Development Agreement"), agree as follows:
- The following language will be added at the end of Clause 2.6(3)(f) of the Franchise Agreement, and if applicable Clause 2.7.3(h) of the Multi-Unit Development Agreement:
You will not be required to sign a general release upon renewal of the Franchise Agreement.
- The following language will be added at the end of Clause 9.2(2) of the Franchise Agreement:
All covenants restricting competition are subject to NDCC §9-08-06. Covenants not to compete such as those mentioned above are gene
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, a North Dakota amendment exists that impacts the requirement of signing a general release. Specifically, if a Chatime franchisee is located in North Dakota, they will not be required to sign a general release upon renewal of the Franchise Agreement. This amendment directly addresses Clause 2.6(3)(f) of the Franchise Agreement and, if applicable, Clause 2.7.3(h) of the Multi-Unit Development Agreement. This suggests that outside of North Dakota, a general release may be required upon renewal.
Furthermore, the FDD includes a general release form. It specifies that the release does not extend to claims unknown to the creditor at the time of execution, which would have materially affected the settlement with the debtor if known. This clause protects the franchisee from unknowingly waiving rights to claims they are not yet aware of. The release is also limited to the maximum scope that is enforceable, meaning that if any part of the release is deemed too broad, it will be interpreted to the narrowest enforceable scope.
However, the general release does not relieve any person from liability imposed on the franchisor by applicable laws. This ensures that Chatime remains accountable for liabilities under the law, regardless of the release. The inclusion of these clauses and the North Dakota amendment suggests that Chatime may, under certain circumstances, require a general release, but there are limitations and protections in place for the franchisee, especially in North Dakota.