Under what condition does the Restraint Period not apply to a Chatime franchisee?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
rst obtaining our written consent. These provisions are subject to state law. |
| MDA: §7.2(2) | Defined as a "Restraint Period" which is a period of |
|---|---|
| two years following the expiration or termination of | |
| your Franchise Agreement in the "Restraint Area" | |
| which is (i) your Territory, or (ii) any area within | |
| twenty five miles of any Chatime Store. During the | |
| Restraint Period, you and any guarantors will not (i) | |
| engage or be concerned or interested in any business | |
| within the Restraint Area that supplies products or | |
| services the same or similar to those at any time | |
| supplied by your franchise business or that could be | |
| reasonably regarded as a market competitor of the | |
| Chatime network or | |
| any Store, (ii) canvass or solicit | |
| any person who was a customer, employee, or | |
| prospective franchisee of ours in the twelve months | |
| prior | |
| to | |
| the | |
| termination | |
| or | |
| expiration | |
| of | |
| your | |
| MDA, | |
| or | |
| (iii) | |
| employ | |
| any | |
| person | |
| who | |
| was | |
| employed | |
| by | |
| us | |
| or | |
| any | |
| other franchisee without first obtaining our written | |
| consent. These provisions shall not apply to your | |
| continued operation | |
| of individual Chatime Stores under | |
| valid Franchise Agreements which have not been | |
| terminated | |
| and | |
| are | |
| not | |
| in | |
| default. | |
| These | |
| provisions | |
| are | |
| subject | |
| to | |
| state | |
| law | |
| s. Modification of agreement | §25.13 | Your Franchise Agreement may only be modified by the parties in writing.
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, the Restraint Period, which restricts a franchisee's activities after the termination or expiration of their Franchise Agreement, does not apply if the franchisee continues to operate individual Chatime stores under valid Franchise Agreements that have not been terminated and are not in default.
Specifically, the Restraint Period typically lasts for two years within the Restraint Area, defined as the franchisee's Territory or any area within twenty-five miles of any Chatime store. During this period, the franchisee and any guarantors are restricted from engaging in any competitive business, soliciting Chatime's customers or employees, or employing individuals associated with Chatime or its franchisees without written consent.
However, this restriction is waived if the franchisee continues to operate Chatime stores under agreements that are still valid, not terminated, and not in default. This means that a franchisee who owns multiple Chatime locations can continue to operate those locations without being subject to the Restraint Period, as long as those specific franchise agreements remain in good standing. This provision is also subject to state law, which may provide additional stipulations or limitations.