Under what conditions can a Chatime franchisee terminate the franchise agreement during the cooling-off period?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
s employees and agents against all damages, sums of money, costs, charges, expenses, actions, claims, liabilities, injuries, and demands made against or suffered by Franchisor, its employees, and agents for the period Franchisor operates and manages the Franchise pursuant to this clause 14.
15 Termination of Agreement
- 15.1 Franchisee may terminate during cooling off period as follows:
- (1) Franchisee may terminate this Agreement by giving written notice to Franchisor within 7 days of the date of this Agreement.
- (2) If Franchisee terminates this Agreement in accordance with clause 15.1(1), Franchisor must, within 14 days after receiving the notice of termination, return all payments (whether of money or other valuable consideration) made by Franchisee to Franchisor under this Agreement less the following amounts which constitute the reasonable Costs of Franchisor in connection with the grant of this Agreement:
- (a) 20% of the New Outlet Fee representing the reasonable Costs of Franchisor in relation to the selection and induction of Franchisee;
- (b) The amount of $5,000 representing the reasonable Costs of F
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a franchisee has the option to terminate the franchise agreement during a cooling-off period. Specifically, the franchisee can terminate the agreement by providing written notice to Chatime within 7 days of the date of the agreement. This allows a short window for the franchisee to reconsider their decision after signing the franchise agreement.
If the franchisee chooses to terminate the agreement within this 7-day period, Chatime is obligated to return all payments made by the franchisee under the agreement. However, Chatime can deduct certain amounts to cover their reasonable costs. These costs include 20% of the New Outlet Fee, which represents the expenses Chatime incurs for the selection and induction of the franchisee. Additionally, Chatime can deduct $5,000 to cover the costs associated with the instructions, negotiation, preparation, and execution of the franchise agreement and any related collateral agreements.
Furthermore, Chatime can also deduct all reasonable costs related to the training of the franchisee, including any payments made to the franchisee during the training period. This means that while the franchisee is entitled to a refund of their initial payments, Chatime retains the right to be compensated for the expenses they incurred in setting up the franchise and training the franchisee. This is a fairly standard practice in franchising, as the franchisor will have invested time and resources even in the early stages of a franchise relationship.