Under what conditions does the continuing security guarantee and indemnity for a Chatime franchise remain in full force?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
18.5 Continuing Security
This guarantee and indemnity is a continuing security, and is not discharged or prejudicially affected by any settlement of accounts, but remains in full force until a final release is given by Franchisor.
18.6 Matters Not Affecting Guarantor's Liability
Guarantor's liability under clauses 18.3 and 18.4 is not affected by:
(1) The granting of time, forbearance, or other concession by Franchisor to Franchisee or any Guarantor;
(2) An absolute or partial release of Franchisee or any Guarantor or a compromise with Franchisee or any Guarantor;
(3) A variation of this Agreement;
(4) A transfer of this Agreement by Franchisee;
(5) The termination of this Agreement;
(6) Any disputes or differences between Franchisee and Franchisor;
(7) The fact that this Agreement is wholly or partially void, voidable, or unenforceable;
(8) The non-execution of this Agreement by one or more of the persons named as Guarantor or the unenforceability of the guarantee or indemnity against one or more of Guarantors; or
(9) The exercise or purported exercise by Franchisor of its rights under this Agreement.
18.7 Payment Later Avoided
Guarantor's liability is not discharged by a payment to Franchisor which is later avoided by law. If that happens, the parties are restored to their respective rights and obligations as if the payment had not been made.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the guarantee and indemnity provided by the guarantor is a continuing security that remains fully effective. This security is not discharged or negatively impacted by any settlement of accounts. It stays in effect until Chatime provides a final release to the guarantor.
Several factors do not affect the guarantor's liability. These include Chatime granting time, forbearance, or other concessions to the franchisee or any guarantor, an absolute or partial release of the franchisee or any guarantor, a compromise with the franchisee or any guarantor, or a variation of the Franchise Agreement. The guarantor's liability also remains intact if the Franchise Agreement is transferred by the franchisee or terminated, or if there are any disputes between the franchisee and Chatime.
Furthermore, the guarantor's obligations persist even if the Franchise Agreement is wholly or partially void, voidable, or unenforceable. The guarantee remains valid regardless of whether all persons named as guarantors have executed the agreement or if the guarantee or indemnity is unenforceable against one or more guarantors. The guarantor's liability is also unaffected by Chatime's exercise or purported exercise of its rights under the Franchise Agreement.
Finally, if a payment to Chatime is later avoided by law, the guarantor's liability is not discharged. In such cases, both parties are restored to their original rights and obligations as if the payment had never occurred, ensuring the continuing security remains in full force.