Under what condition will Chatime be liable for the obligations of the tenant under the lease?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
Landlord acknowledges and agrees that notwithstanding any terms or conditions contained in this Agreement or any other agreement, Franchisor shall in no way be construed as a guarantor or surety of Tenant's obligations under the Lease.
Notwithstanding the foregoing, in the event Franchisor becomes the tenant by assignment of the Lease in accordance with the terms hereof or enters into a new lease with Landlord, then Franchisor shall be liable for all obligations of Tenant on its part to be performed or observed under the Lease or a new lease.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime is generally not a guarantor of the tenant's (franchisee's) obligations under the lease. However, there is a specific condition under which Chatime will assume liability.
Chatime will be liable for all obligations of the tenant if Chatime becomes the tenant by assignment of the lease, or if Chatime enters into a new lease with the landlord. This means that if the franchisee defaults or the franchise agreement is terminated, Chatime has the option to take over the lease to maintain control of the location.
This clause protects Chatime by ensuring they can continue operating a location even if the original franchisee can no longer do so. For a prospective franchisee, this highlights the importance of understanding the conditions under which Chatime might take over the lease, as it could impact the franchisee's rights and obligations should the franchise agreement be terminated.