Can Chatime suspend delivery of product or supplies to the Developer as a remedy for a default?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event of grounds for a default by the Developer, Franchisor is entitled in its sole discretion to exercise any other remedies in lieu of or prior to terminating the Agreement, which may include but are not limited to reduction in the geographic area of the Development Area, removal of exclusivity within the Development Area, termination or suspension of any and all services provided to Developer by Franchisor, its Affiliates, or approved suppliers; suspension of delivery of product or supplies to Developer by Franchisor, its Affiliates, or approved suppliers; imposition of different credit terms for delivery of product or supplies to Developer by Franchisor, its Affiliates or approved suppliers; temporary operation of the Developer's Operation pursuant to this Agreement; removal of Developer from the Franchisor's website, directory, or social media; execution and delivery of a Release, and imposition of any additional or different requirements for Developer to maintain its right to continue operating the Developer's Operation.
Franchisor's exercise of any of these other remedies shall not in any way impair or waive Franchisor's right in the future to terminate the Agreement or to exercise any other rights under this Agreement.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime has the right to suspend delivery of products or supplies to the Developer (franchisee) as a remedy for default. Specifically, if grounds for default exist, Chatime can choose to exercise several remedies instead of or before terminating the agreement.
These remedies include, but are not limited to, reducing the geographic area of the Development Area, removing exclusivity within that area, or suspending services to the Developer. Chatime can also suspend the delivery of products or supplies by Chatime, its affiliates, or approved suppliers. Additionally, Chatime can impose different credit terms for product deliveries, temporarily operate the Developer's business, remove the Developer from Chatime's website or social media, require a release, or impose additional requirements for the Developer to continue operating.
It is important to note that Chatime's use of any of these alternative remedies does not waive its right to terminate the agreement or exercise other rights in the future. This provides Chatime with flexibility in addressing defaults while protecting its long-term interests. A prospective franchisee should understand that Chatime has several options for addressing a franchisee's default, and suspension of supplies is one potential consequence.