Can Chesters terminate the Franchise Agreement without cause?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
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| Provision | Section in franchise or other agreement | Summary | |
|---|---|---|---|
| d. | Termination by franchisee | Not Applicable | You have no contractual right to terminate the Agreement. However, you have the right to terminate the Agreement on any grounds available under applicable state law. |
| e. | Termination by franchisor without cause | Not Applicable | We have no right to terminate your Agreement without cause. |
| f. | Termination by franchisor with cause | 18 and 19 of Agreement | We have right to terminate only if you breach the Agreement. |
| g. | "Cause" defined – curable defaults | 19 of Agreement | You generally have 20 days to cure all defaults that by their nature can be cured. |
| h. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 35–38)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, Chesters does not have the right to terminate the Franchise Agreement without cause. The FDD specifies that Chesters can only terminate the agreement if the franchisee breaches it. This is a significant protection for franchisees, as it prevents Chesters from ending the agreement for arbitrary or capricious reasons.
If a franchisee does breach the agreement, Chesters typically provides an opportunity to correct the issue. The franchisee generally has 20 days to cure defaults that can be cured. However, some defaults, such as unapproved transfers or a third failed restaurant inspection, are considered non-curable, meaning Chesters can terminate the agreement immediately upon such a breach.
This termination structure is fairly standard in franchising. Franchisors usually require a material breach before terminating an agreement to ensure fairness and protect franchisees who are operating in good faith. Prospective franchisees should carefully review Sections 18 and 19 of the Franchise Agreement, as referenced in the FDD, to fully understand what constitutes a breach and the specific circumstances under which Chesters can terminate the agreement.