Can Chatime suspend services 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, Chatime has the right to suspend services to a franchisee as a remedy for default. Specifically, if a franchisee is in default, Chatime can choose to exercise other remedies instead of or before terminating the agreement. These remedies include terminating or suspending any and all services provided to the franchisee by Chatime, its affiliates, or approved suppliers. Chatime can also suspend the delivery of product or supplies to the franchisee by Chatime, its affiliates, or approved suppliers.
Chatime can also impose different credit terms for the delivery of products or supplies. Additionally, Chatime has the option to temporarily operate the franchised business according to Section 14 of the agreement. Chatime can also remove the franchisee from Chatime's website, directory, or social media. Chatime can also require the franchisee to execute and deliver a Release in the form attached as Exhibit 1, and impose any additional or different requirements for Franchisee to maintain its right to continue operating the Franchised Business.
It is important to note that Chatime's decision to exercise any of these remedies does not waive its right to terminate the agreement or exercise any other rights under the agreement in the future. This means that even if Chatime initially chooses to suspend services or take other actions, it can still decide to terminate the franchise agreement later if the franchisee does not resolve the default or if other grounds for termination arise.