Can Chatime suspend delivery of product or supplies to the franchisee as a remedy for default?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- 15.4 Other Remedies. In the event of grounds for a default by the Franchisee, 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 termination or suspension of any and all services provided to Franchisee by Franchisor, its Affiliates, or approved suppliers; suspension of delivery of product or supplies to Franchisee by Franchisor, its Affiliates, or approved suppliers; imposition of different credit terms for delivery of product or supplies to Franchisee by Franchisor, its Affiliates or approved suppliers; temporary operation of the Franchised Business pursuant to Section 14 of this Agreement; removal of Franchisee from the Franchisor's website, directory, or social media; execution and delivery of a Release in the form attached as Exhibit 1, and imposition of any additional or different requirements for Franchisee to maintain its right to continue operating the Franchised Business. 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, if a franchisee defaults, Chatime has the right to suspend the delivery of products or supplies. Specifically, Chatime can suspend delivery of product or supplies to the franchisee by Chatime, its affiliates, or approved suppliers.
This remedy is one of several options Chatime may exercise instead of, or before, terminating the franchise agreement. Other remedies available to Chatime include terminating or suspending services to the franchisee, imposing different credit terms, temporarily operating the franchise, removing the franchisee from Chatime's website or directory, requiring a release, and imposing additional requirements for the franchisee to continue operating.
It is important to note that Chatime's decision to exercise any of these alternative remedies does not prevent them from later terminating the agreement or exercising other rights. This provides Chatime with flexibility in addressing franchisee defaults while protecting their long-term interests. A prospective franchisee should consider the potential impact of supply suspension on their business operations and discuss this and other default remedies with Chatime before signing the franchise agreement.