Within how many days of the Chatime Development Agreement date can the Developer terminate the agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
hisor will not be liable to Developer in any way for anything done by Franchisor while it operates and manages the Development Business in accordance with this clause 12, except for acts or omissions arising from the gross negligence or willful misconduct of Franchisor. Developer indemnifies Franchisor and its 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 Development Business pursuant to this clause 12.
13 Termination of Agreement
13.1 Developer May Terminate During Cooling Off Period
- (1) Developer may terminate this Agreement by giving written notice to Franchisor within 7 days of the date of this Agreement.
- (2) If Developer terminates this Agreement in accordance with clause 13.1(1), Franchisor must, within 14 days after receiving the notice of termination, return all payments (whether of money or other valuable consideration) made by Developer to Franchisor under this Agreement less the
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, a developer has a limited time to terminate the Development Agreement. Specifically, the developer can terminate the agreement by providing written notice to Chatime within 7 days of the agreement's date. This is often referred to as a "cooling-off period" and is designed to allow the franchisee time to reconsider their decision after signing the agreement.
If the developer chooses to terminate the agreement within this 7-day period, Chatime is obligated to return all payments made by the developer. However, Chatime can deduct certain costs incurred in connection with granting the agreement. These costs include 20% of the development fee, which covers expenses related to the selection and induction of the developer, $5,000 for the costs associated with the negotiation, preparation, and execution of the agreement and collateral agreements, and all reasonable costs related to the developer's training, including payments made to the developer during training.
This cooling-off period is a crucial aspect for potential Chatime developers to understand. It provides a safety net, allowing them to withdraw from the agreement if they have second thoughts or discover new information that makes the franchise opportunity less appealing. However, it's important to note that while most of the initial investment will be returned, the developer will still bear the costs associated with the initial stages of the franchise process. Therefore, thorough due diligence is still essential before signing the agreement, even with the availability of a cooling-off period.