Which specific clauses survive the termination or expiration of the Chatime Franchise Agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
9.8 Disgorgement
In addition to all other remedies and rights of Franchisor under this Agreement, if any of Franchisee, Guarantor, or their Interested Parties breaches clause 9.2 or 9.3, Franchisee must account for and pay to Franchisor all compensation, profits, monies, accruals, increments, or other benefits derived or received as a result of any such breach.
10 Indemnity and Limitation of Liability
10.1 Indemnity
- (1) Franchisee Parties indemnify Franchisor and each of its Affiliates (Chatime Group) against all:
- (a) Losses incurred by the Chatime Group;
- (b) Liabilities incurred by the Chatime Group; and
- (c) All Legal Costs and other Costs and expenses incurred by the Chatime Group in connection with a demand, action, arbitration, or other proceeding (including mediation, compromise, out of court settlement or appeal),
arising directly or indirectly as a result of or in connection with:
- (d) A breach by Franchisee Parties of this Agreement or any Collateral Agreement;
- (e) Any injury to, or loss of property of, any person in or on premises from which the business is conducted;
- (f) Franchisee's taxes, liabilities or Costs of The Franchised Business;
- (g) Any negligent or willful act or omission of Franchisee, its employees, agents, servants, or contractors; and
- (h) Any warranty, promise, or representation made by Franchisee Parties or any employee, agent, or other person acting on behalf of Franchisee Parties being incomplete, inaccurate, or misleading.
- (2) Franchisor's rights at law and under this Agreement, including its right to be indemnified under this clause, are not affected by:
- (a) Franchisor ending the Franchise or the termination of any Collateral Agreement;
- (b) Franchisor accepting Franchisee's repudiation of this Agreement or any related Agreement; or
- (c) Anything else.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, several clauses within the agreement remain in effect even after termination or expiration. Specifically, if a franchisee, guarantor, or their interested parties breach clause 9.2 or 9.3, the franchisee is obligated to account for and pay Chatime all compensation, profits, or other benefits derived from such a breach. This ensures that Chatime can recover any financial gains the franchisee obtained through unauthorized activities, even after the agreement ends.
Additionally, the franchisee is required to indemnify Chatime and its affiliates against various losses, liabilities, and legal costs arising from breaches of the agreement, injuries or property loss on the premises, franchisee's taxes or liabilities, negligence, or misleading representations. This indemnification clause protects Chatime from financial burdens resulting from the franchisee's actions or failures, even after the franchise agreement is no longer active.
Chatime's rights at law and under the agreement, including the right to indemnification, are not affected by the termination of the franchise or any related agreements, the franchisor accepting the franchisee's repudiation, or any other event. This reinforces the enduring nature of these clauses, ensuring that Chatime retains its legal protections and rights regardless of the circumstances surrounding the termination or expiration of the agreement. This is a fairly standard practice in franchising, as it protects the franchisor from liabilities stemming from the franchisee's actions, even after the business relationship has ended.