Under what conditions can a Chatime franchisee terminate the franchise agreement due to a material breach by the franchisor?

According to the 2025 Chatime Franchise Disclosure Document, a franchisee's ability to terminate the franchise agreement due to a material breach by Chatime is determined by applicable law. Specifically, the New York amendment to the Chatime franchise agreement states that a franchisee may terminate the agreement on any grounds available by law. This means that if Chatime materially breaches the franchise agreement in a way that gives the franchisee the legal right to terminate under New York law (or the laws of another applicable jurisdiction), the franchisee can do so.

This provision is further reinforced by stipulations within the New York amendment that ensure franchisees retain all rights and causes of action arising from Article 33 of the General Business Law of the State of New York. Additionally, no statement or acknowledgement signed by the franchisee can waive claims under state franchise law, including fraud in the inducement, or disclaim reliance on statements made by Chatime. These stipulations provide additional protection to franchisees in New York, ensuring they are not inadvertently waiving their legal rights through contractual clauses.

For prospective Chatime franchisees, particularly those in New York, this means they have the right to terminate the agreement if Chatime violates the terms in a significant way that is recognized under applicable law. It is important for franchisees to understand their rights under state and local laws and to seek legal counsel if they believe Chatime has committed a material breach. This clause ensures that franchisees are not locked into an agreement if Chatime fails to uphold its obligations, providing a legal recourse for franchisees facing such situations.