Under what circumstances can Chatime terminate the franchise agreement immediately?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
| | MDA: § 13.3(1) | All defaults must be cured within 30 days after notice. | | h. n-curable defaults | FA: §15.3(4) | We may terminate your Franchise Agreement immediately upon written notice to you if (i) you or a guarantor breach any provision under Clauses 6, 9.2, or 9.3 of your Franchise Agreement, (ii) a force majeure event continues for more than 180 days, (iii) you no longer hold a license required to carry on your franchise business, (iv) you voluntarily abandon your franchise business, (v) you or a guarantor are convicted of a serious offense, (vi) your operations endanger public health or safety, (vii) you are fraudulent in connection with your operations or commit a fraud upon us, or (viii) you voluntarily petition in bankruptcy, are adjudicated a bankrupt or insolvent, or a receiver, manager, liquidator, or other person is appointed for a substantial part of your assets. | |-----------------------------|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | MDA: §13.3(4) | We may terminate your MDA immediately upon written notice to you if (i) you or a guarantor breach any provision under Clauses 6, 7.2, or 7.3 of your MDA, (ii) a force majeure event continues for more than 180 days, (iii) you no longer hold a license required to carry on your franchise business, (iv) you voluntarily abandon your multi-unit development business, (v) you or a guarantor are convicted of a serious offense, (vi) your operations endanger public health or safety, (vii) you are fraudulent in connection with your operations or commit a fraud upon us, or (viii) you voluntarily petition in bankruptcy, are adjudicated a bankrupt or insolvent, or a receiver, manager, liquidator, or other person is appointed for a substantial part of your assets. |
| i. Franchisee's obligations on termination/non-renewal | FA: §17 | Upon expiration or termination of your Franchise Agreement, you will immediately (i)
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 43–52)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime can terminate the Franchise Agreement immediately with written notice under specific circumstances. These circumstances include if the franchisee or a guarantor breaches provisions under Clauses 6, 9.2, or 9.3 of the Franchise Agreement. Other reasons for immediate termination include a force majeure event lasting more than 180 days, the franchisee no longer holding a required license, or the franchisee voluntarily abandoning the franchise business.
Immediate termination can also occur if the franchisee or a guarantor is convicted of a serious offense, if the franchise operations endanger public health or safety, or if the franchisee engages in fraudulent activities related to the operations or commits fraud against Chatime. Additionally, Chatime can immediately terminate the agreement if the franchisee voluntarily files for bankruptcy, is declared bankrupt or insolvent, or if a receiver, manager, liquidator, or another similar person is appointed for a substantial portion of the franchisee's assets.
These termination conditions are also applicable to the Multi-Unit Development Agreement (MDA). Chatime may terminate the MDA immediately if the franchisee or a guarantor breaches provisions under Clauses 6, 7.2, or 7.3 of the MDA. Similar to the Franchise Agreement, immediate termination of the MDA can occur due to a prolonged force majeure event (over 180 days), loss of required licenses, voluntary abandonment of the multi-unit development business, conviction of a serious offense, endangering public health or safety, fraudulent activities, or bankruptcy-related events.