Can Chatime terminate or suspend services provided 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 terminate or suspend services provided to the Developer in the event of a default. Specifically, in the event of grounds for a default by the Developer, Chatime is entitled to exercise remedies, which may include the termination or suspension of any and all services provided to the Developer by Chatime, its Affiliates, or approved suppliers.
This provision grants Chatime broad discretion in how it responds to a Developer's default. Rather than immediately terminating the agreement, Chatime can opt to suspend services as a less drastic measure. This could involve temporarily halting training, marketing support, or other services that Chatime typically provides. It also allows Chatime to suspend delivery of product or supplies to the Developer.
It is important to note that Chatime's exercise of these other remedies does not waive its right to terminate the agreement or exercise any other rights in the future. This means that even if Chatime initially chooses to suspend services, it can still later decide to terminate the agreement if the default is not resolved or if other issues arise. This clause provides Chatime with flexibility in managing defaults while protecting its long-term interests.