Does Chatime have the right to terminate the franchise agreement without cause?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
| e. Termination by franchisor without | FA: Not applicable | Not applicable. | | "cause" | MDA: Not applicable | Not applicable | | f. Termination by franchisor with "cause" | FA: §15.3 | We have the right to terminate your Franchise Agreement with cause. Depending upon the reason for termination, we may not provide you with an opportunity to cure. | | | MDA: § 13.3 | We have the right to terminate your MDA with cause. Depending upon the reason for termination, we may not provide you with an opportunity to cure. | | g. Curable defaults | FA: §15.3(1) | All defaults must be cured within 30 days after notice. | | | MDA: § 13.3(1) | All defaults must be cured within 30 days after notice. | | h. n-curable defaults | FA: §15.3(4) | We may terminate your Franchise Agreement immediately upon written notice to you if (i) you or a guarantor breach any provision under Clauses 6, 9.2, or 9.3 of your Franchise Agreement, (ii) a force majeure event continues for more than 180 days, (iii) you no longer hold a license required to carry on your franchise business, (iv) you voluntarily abandon your franchise business, (v) you or a guarantor are convicted of a serious offense, (vi) your operations endanger public health or safety, (vii) you are fraudulent in connection with your operations or commit a fraud upon us, or (viii) you voluntarily petition in bankruptcy, are adjudicated a bankrupt or insolvent, or a receiver, manager, liquidator, or other person is appointed for a substantial part of your assets. | |-----------------------------|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | MDA: §13.3(4) | We may terminate your MDA immediately upon written notice to you if (i) you or a guarantor breach any provision under Clauses 6, 7.2, or 7.3 of your MDA, (ii) a force majeure event continues for more than 180 days, (iii) you no longer hold a license required to carry on your franchise business, (iv) you voluntarily abandon your multi-unit development business, (v) you or a guarantor are convicted of a serious offense, (vi) your operations endanger public health or safety, (vii) you are fraudulent in connection with your operations or commit a fraud upon us, or (viii) you voluntarily petition in bankruptcy, are adjudicated a bankrupt or insolvent, or a receiver, manager, liquidator, or other person is appointed for a substantial part of your assets.
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 43–52)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime does not have the right to terminate the Franchise Agreement without cause. The FDD outlines termination rights for both the franchisee and franchisor.
Specifically, Chatime can terminate the Franchise Agreement with cause, and depending on the reason for termination, may not provide an opportunity to cure the default. There are also defaults that Chatime can terminate immediately upon written notice, such as breaching specific clauses within the agreement, a force majeure event lasting over 180 days, loss of required licenses, abandonment of the franchise, conviction of a serious offense, endangering public health or safety, fraud, or bankruptcy.
The franchisee also has termination rights under certain conditions, such as providing written notice of termination within seven days after execution of the agreement, or if Chatime materially breaches the agreement and fails to remedy the breach after notification and a 60-day period to cure. These termination provisions are subject to state law, which may provide additional protections or restrictions for franchisees.
Prospective franchisees should carefully review the conditions under which Chatime can terminate the agreement with cause, as well as the franchisee's rights and obligations upon termination, to fully understand their rights and responsibilities. Understanding these termination conditions is crucial for assessing the risks and benefits of investing in a Chatime franchise.