Under what conditions can Chatime terminate the multi-unit development agreement with cause?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
| f. Termination by franchisor with "cause" | FA: §15.3 | We have the right to terminate your Franchise Agreement with cause. Depending upon the reason for termination, we may not provide you with an opportunity to cure. | | | MDA: § 13.3 | We have the right to terminate your MDA with cause. Depending upon the reason for termination, we may not provide you with an opportunity to cure. | | g. Curable defaults | FA: §15.3(1) | All defaults must be cured within 30 days after notice. | | | MDA: § 13.3(1) | All defaults must be cured within 30 days after notice. | | h. n-curable defaults | FA: §15.3(4) | We may terminate your Franchise Agreement immediately upon written notice to you if (i) you or a guarantor breach any provision under Clauses 6, 9.2, or 9.3 of your Franchise Agreement, (ii) a force majeure event continues for more than 180 days, (iii) you no longer hold a license required to carry on your franchise business, (iv) you voluntarily abandon your franchise business, (v) you or a guarantor are convicted of a serious offense, (vi) your operations endanger public health or safety, (vii) you are fraudulent in connection with your operations or commit a fraud upon us, or (viii) you voluntarily petition in bankruptcy, are adjudicated a bankrupt or insolvent, or a receiver, manager, liquidator, or other person is appointed for a substantial part of your assets. | |-----------------------------|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | MDA: §13.3(4) | We may terminate your MDA immediately upon written notice to you if (i) you or a guarantor breach any provision under Clauses 6, 7.2, or 7.3 of your MDA, (ii) a force majeure event continues for more than 180 days, (iii) you no longer hold a license required to carry on your franchise business, (iv) you voluntarily abandon your multi-unit development business, (v) you or a guarantor are convicted of a serious offense, (vi) your operations endanger public health or safety, (vii) you are fraudulent in connection with your operations or commit a fraud upon us, or (viii) you voluntarily petition in bankruptcy, are adjudicated a bankrupt or insolvent, or a receiver, manager, liquidator, or other person is appointed for a substantial part of your assets.
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, Chatime has the right to terminate the Multi-Unit Development Agreement (MDA) with cause. Depending on the reason for termination, Chatime may not provide an opportunity to cure the default. However, all defaults must be cured within 30 days after notice.
Chatime may terminate the MDA immediately upon written notice if the franchisee or a guarantor breaches any provision under Clauses 6, 7.2, or 7.3 of the MDA. Termination can also occur if a force majeure event continues for more than 180 days, or if the franchisee no longer holds a license required to carry on the franchise business. Other reasons for immediate termination include the franchisee voluntarily abandoning the multi-unit development business, conviction of a serious offense by the franchisee or a guarantor, or operations that endanger public health or safety.
Furthermore, Chatime can immediately terminate the MDA if the franchisee is fraudulent in connection with their operations or commits a fraud upon Chatime. Immediate termination is also possible if the franchisee voluntarily petitions in bankruptcy, is adjudicated bankrupt or insolvent, or if a receiver, manager, liquidator, or other person is appointed for a substantial part of the franchisee's assets. These conditions provide Chatime with broad authority to terminate the MDA if the franchisee fails to meet its obligations or engages in detrimental conduct.