Can Chatime subcontract its obligations in the Development Area to another party?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
23.3 Subcontracting and Agency
- (1) Franchisor is entitled to subcontract the performance of any of its obligations to be performed in the Development Area under this Agreement and exercise any of its rights in the Development Area under this Agreement to any person nominated by Franchisor, and any notice required to be given by Franchisor shall be validly given if given by such person.
- (2) Developer must not subcontract the performance of any of its obligations to be performed in the Development Area under this Agreement without the prior consent of Franchisor.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime is entitled to subcontract its obligations within the Development Area to another party nominated by Chatime. This includes the performance of any obligations and the exercise of any rights under the agreement. Furthermore, any notice required from Chatime is considered valid if given by this nominated person.
However, the document states that the developer, or franchisee, is not allowed to subcontract their obligations in the Development Area without first obtaining consent from Chatime. This means that while Chatime has the freedom to delegate its responsibilities, the franchisee must seek approval before doing the same.
This clause highlights a power imbalance in the agreement, where Chatime retains flexibility in managing its obligations, while the franchisee's ability to do so is restricted and subject to Chatime's approval. A prospective franchisee should consider the implications of this clause, especially if they foresee needing assistance in fulfilling their obligations during the term of the agreement.