Under what circumstances can Chatime take action if a person breaches the franchise agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
ded to prevent: (i) the owners, members, shareholders, officer, directors, managers and employees of the Franchised Business from taking unfair advantage of the benefits that may be provided by a franchise for a Chatime Store Business; (ii) the misappropriation, misuse or unauthorised use of the Intellectual Property including the Business System or Confidential Information; and (iii) damage to the Network.
5. DAMAGES NOT AN ADEQUATE REMEDY
I acknowledge and agree that without prejudice to any right or remedy available to the Franchisee or the Franchisor:
- (a) damages are not an adequate remedy if a person breaches this Agreement;
- (b) the Franchisee or the Franchisor may apply for and obtain, without the necessity
of posting a bond, injunctive relief if:
- (i) a person breaches or threatens to breach any provision of this Agreement; or
- (ii) it believes a person is likely to or threatening to breach any provision of this Agreement.
6. ENFORCEMENT
- (a) Franchisor is a third-party beneficiary of this Agreement and may enforce it, solely and/or jointly with the Franchisee. I am aware that my violation of this Agreement will cause the Franchisor and the Franchisee irreparable harm; therefore, I acknowledge and agree that the Franchisee and/or the Franchisor may apply for the issuance of an injunction preventing me from violating this Agreement, and I agree to pay to the Franchisee and the Franchisor all the costs it/they incur(s), including, without limitation, legal fees and expenses, if this Agreement is enforced against me.
- (b) Due to the importance of this Agreement to the Franchisee and the Franchisor, any claim I might have against the Franchisee or the Franchisor is a separate matter and does not entitle me to violate, or justify any violation of this Agreement.
- (c) This Agreement shall be construed under the laws of the State of Delaware. The only way this Agreement can be changed is in writing signed by both the Franchisee, Franchisor, and me.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, both the franchisee and Chatime have rights and remedies available if the franchise agreement is breached. Specifically, Chatime can seek injunctive relief, meaning they can ask a court to order the breaching party to stop the violating behavior. This is possible if someone breaches or threatens to breach any part of the agreement, or if Chatime believes a breach is likely to occur. This remedy is available without Chatime having to post a bond.
Furthermore, the document states that monetary damages may not be sufficient to compensate for a breach. This reinforces Chatime's ability to pursue injunctive relief. The franchisee acknowledges that violating the agreement will cause irreparable harm to both the franchisee and Chatime, further justifying the pursuit of an injunction. The franchisee is also responsible for covering all costs Chatime incurs while enforcing the agreement, including legal fees.
In addition to other rights and remedies, if the franchisee, guarantor, or their interested parties breach clause 9.2 or 9.3, the franchisee must account for and pay to Chatime all compensation, profits, monies, accruals, increments, or other benefits derived or received as a result of any such breach.
The FDD also specifies that any claim the franchisee might have against Chatime does not justify violating the franchise agreement. This underscores the importance of adhering to the agreement's terms, regardless of any disputes that may arise. The agreement is governed by the laws of Delaware, and any changes must be made in writing and signed by the franchisee, franchisor, and the person involved.