Does the termination of the Chatime franchise agreement affect obligations that are capable of surviving the end of the franchise?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (2) Franchisor's rights at law and under this Agreement, including its right to be indemnified under this clause, are not affected by:
- (a) Franchisor ending the Franchise or the termination of any Collateral Agreement;
- (b) Franchisor accepting Franchisee's repudiation of this Agreement or any related Agreement; or
- (c) Anything else.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, the termination of the franchise agreement by Chatime does not affect the franchisor's rights at law or the franchisee's obligation to indemnify Chatime. This means that even after the franchise agreement ends, certain obligations of the franchisee, such as the duty to cover Chatime's losses resulting from the franchisee's actions or breaches of the agreement, remain in effect.
Specifically, the franchisee's duty to indemnify Chatime extends to losses and liabilities incurred by the Chatime Group, including legal costs, arising from breaches of the franchise agreement, injuries or property loss on the business premises, the franchisee's taxes or costs, negligent acts or omissions, and any incomplete, inaccurate, or misleading statements made by the franchisee. This obligation survives termination, ensuring Chatime can seek compensation for these issues even after the franchise relationship has ended.
This provision is typical in franchise agreements, as it protects the franchisor from liabilities stemming from the franchisee's conduct during the term of the agreement. Prospective Chatime franchisees should understand that these obligations continue even after the franchise is no longer active, and they should carefully review the indemnity clause to fully grasp the scope of their responsibilities.