What state's law governs a Chatime multi-unit development agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise | Summary |
|---|---|---|
| Agreement (FA) and Multi-Unit Development Agreement (MDA) | ||
| a. Length of the | FA: §1.1(27) | The term is ten years. |
| franchise term | ||
| MDA: §1.1(34) | The period ending the end date of the agreed Development Period. . | |
| b. Renewal or extension of the term | FA: §1.1(40); §2.6 | At the end of the initial term of your Franchise Agreement, we may grant you the option to continue operating as a franchisee in your Territory and to enter into a new Franchise Agreement for a renewal term of ten years. |
| MDA: § 2.7 | At the end of the initial term of your Franchise Agreement, you may request to enter into an additional term of ten years under the terms of our then-current form of multi-unit development agreement, which may contain different terms | |
| u. Dispute resolution by arbitration or mediation | §16 | Except as otherwise provided, all disputes and claims relating to your Franchise Agreement or the relationship of the parties must be settled by mediation or arbitration in New York in accordance with the rules of the American Arbitration Association (“AAA”) mediation and arbitration service. These provisions are subject to state law. |
| MDA: §14 | Except as otherwise provided, all disputes and claims relating to your MDA or the relationship of the parties must be settled by mediation or arbitration in New York in accordance with the rules of the AAA mediation and arbitration service. These provisions are subject to state law | |
| v. Choice of forum | §16 | Arbitration in New York in accordance with the rules of the AAA service. These provisions are subject to state law. |
| MDA: §14 | Arbitration in New York in accordance with the rules of the AAA service. These provisions are subject to state law. | |
| w. Choice of law | §25.1 | Delaware law. These provisions are subject to state law. |
| MDA: §23.16 | Delaware law. These provisions are subject to state law |
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, the Multi-Unit Development Agreement (MDA) is governed by Delaware law. Specifically, Section 23.16 of the MDA states that Delaware law applies to the agreement. However, this provision is subject to state law, implying that certain state-specific regulations may override or supplement the Delaware law in specific instances.
This means that while the core legal framework for the Chatime MDA is based in Delaware, franchisees need to be aware that the laws of the state in which they operate their franchise may also have an impact. This could affect how certain clauses of the agreement are interpreted or enforced.
Prospective Chatime franchisees should consult with a legal professional to understand how both Delaware law and the laws of their specific state apply to the MDA. This is particularly important for multi-unit developers, as they may be operating in multiple states, each with its own set of regulations that could influence the terms and enforcement of their agreement with Chatime.