What is Chatime's requirement regarding a lease addendum, and what option does it grant to Chatime?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
We will review your lease to ensure that you have obtained a lease addendum, in substantially the form attached to the Franchise Agreement, which must give us the option but not the obligation to assume the lease if you default on the lease, and which must require the landlord to give written notice to us of any defaults by you. (Clause 4.9 of the Franchise Agreement).
Source: Item 11 — Franchisor's Assistance, Advertising, Computer Systems, and Training (FDD pages 27–35)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, franchisees are required to obtain a lease addendum in a specific format attached to the Franchise Agreement. This addendum must grant Chatime the option, but not the obligation, to assume the lease if the franchisee defaults on the lease. Additionally, the lease addendum must require the landlord to provide written notice to Chatime of any defaults by the franchisee.
This requirement ensures that Chatime has the ability to protect its brand and location by stepping in to take over a lease if a franchisee fails to meet their obligations. It provides Chatime with a safety net, allowing them to maintain control over the premises and potentially find a new franchisee for the location, thus minimizing disruption to the Chatime network.
For a prospective franchisee, this means that negotiating a lease will involve ensuring that the landlord is willing to accept Chatime's required addendum. This could potentially complicate lease negotiations, as some landlords may be hesitant to grant Chatime the option to assume the lease or to provide direct notice of default. Franchisees should factor this requirement into their site selection and lease negotiation strategy.
It is important for potential Chatime franchisees to carefully review the form of lease addendum attached to the Franchise Agreement to fully understand the terms and conditions that will be required by Chatime and to discuss any concerns with a legal advisor before signing the Franchise Agreement.