Under what specific clauses can Chatime immediately terminate the franchise agreement upon written notice?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
- (4) Notwithstanding any other provision in this clause 15, Franchisor may terminate this Agreement immediately upon written notice to Franchisee if:
- (a) The Defaulting Party breaches any provision under clause 6 (Initial and Continuing Fees), 9.2 (No Other Business Interests) or 9.3 (Restraint Applies to Conduct in Any Capacity).
- (b) A force majeure event (as referred to in clause 23) continues for more than 180 days;
- (c) Franchisee no longer holds a license that Franchisee must hold to carry on The Franchised Business;
- (d) Franchisee voluntarily abandons The Franchised Business;
- (e) Franchisee or a Guarantor is convicted of a serious offense;
- (f) The Franchised Business is operated in a way that endangers public health or safety;
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime can terminate the franchise agreement immediately with written notice under specific circumstances. These include breaches of clauses related to initial and continuing fees (Clause 6), having other business interests without approval (Clause 9.2), or violating the restraint on conduct in any capacity (Clause 9.3).
Additionally, Chatime can immediately terminate the agreement if a force majeure event continues for more than 180 days, if the franchisee loses a required license to operate the business, or if the franchisee voluntarily abandons the business. The agreement can also be terminated immediately if the franchisee or a guarantor is convicted of a serious offense, or if the franchised business is operated in a way that endangers public health or safety.
These termination rights are significant for a prospective Chatime franchisee because they outline specific situations where the franchise can be terminated without the opportunity to remedy the issue. It is important to understand these clauses and ensure compliance to avoid immediate termination of the franchise agreement. Franchisees should be aware of the conditions that could lead to immediate termination and take steps to prevent such occurrences.