Can Chatime terminate the agreement immediately if the franchised business endangers public health or safety?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
(4) Notwithstanding any other provision in this clause 15, Franchisor may terminate this Agreement immediately upon written notice to Franchisee if:
- (a) The Defaulting Party breaches any provision under clause 6 (Initial and Continuing Fees), 9.2 (No Other Business Interests) or 9.3 (Restraint Applies to Conduct in Any Capacity).
- (b) A force majeure event (as referred to in clause 23) continues for more than 180 days;
- (c) Franchisee no longer holds a license that Franchisee must hold to carry on The Franchised Business;
- (d) Franchisee voluntarily abandons The Franchised Business;
- (e) Franchisee or a Guarantor is convicted of a serious offense;
- (f) The Franchised Business is operated in a way that endangers public health or safety;
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime can terminate the franchise agreement immediately if the franchised business is operated in a way that endangers public health or safety. Chatime must provide written notice to the franchisee for this immediate termination to take effect.
This immediate termination clause means that Chatime does not need to provide the franchisee with a notice period to correct the issue. This is a significant point for prospective franchisees, as any action or inaction that Chatime deems a threat to public health or safety could result in the immediate loss of their franchise.
It is important for a prospective Chatime franchisee to understand what specific actions or conditions Chatime might consider endangering public health or safety. This could include issues such as food safety violations, unsanitary conditions, or failure to comply with health regulations. Understanding these potential triggers is crucial for ensuring compliance and avoiding immediate termination of the franchise agreement.