Does Chatime require franchisees to acknowledge they are bound by in-term and post-term non-compete covenants in the Franchise Agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Exhibit F to the Franchise Disclosure Document (Acknowledgement Addendum to Franchise Agreement) is deleted. Franchisee and its principals are not required to complete and sign the Acknowledgement Addendum.
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- No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, franchisees and their principals are generally not required to complete and sign an acknowledgement addendum related to non-compete covenants. Specifically, Exhibit F to the Franchise Disclosure Document (Acknowledgement Addendum to Franchise Agreement) is deleted. This means Chatime franchisees will not be asked to formally acknowledge or affirm their understanding and agreement to the non-compete terms within the franchise agreement at the commencement of the franchise relationship.
However, it is important to note that while the acknowledgement addendum is removed, the underlying non-compete clauses within the Franchise Agreement itself may still exist and be enforceable, unless superseded by state-specific laws. For example, in North Dakota, covenants restricting competition are generally considered unenforceable, and the North Dakota addendum to the Chatime Franchise Disclosure Document reflects this. Similarly, Washington prohibits franchisors from restricting franchisees from soliciting or hiring employees of other franchisees or the franchisor.
Therefore, prospective Chatime franchisees should carefully review the Franchise Agreement and any state-specific addenda to understand the specific terms and enforceability of any non-compete provisions in their jurisdiction. They should also consult with legal counsel to fully understand their rights and obligations.