Under what conditions can a Chesters franchisee terminate the Franchise Agreement?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
| 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. | "Cause" defined – non-curable defaults | 11, 18, and 19 of Agreement | Unapproved transfers and third failed in- Restaurant inspection are not curable defaults. |
| i. | Franchisee's obligations on termination/ non-renewal | 20 of Agreement | Obligations include cease operating Restaurant and representing yourself as present or former franchisee; cease using confidential information, Marks, and trade dress; complete de-identification; and payment of amounts due. Also see (r) below. |
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, a franchisee has very limited options for terminating the Franchise Agreement. The FDD indicates that franchisees have no contractual right to terminate the agreement. However, the franchisee does retain the right to terminate the agreement on any grounds available under applicable state law. This means the franchisee's ability to terminate may depend on specific state regulations.
In contrast, Chesters has the right to terminate the agreement if the franchisee breaches it. If the breach is something that can be fixed, the franchisee generally has 20 days to correct the issue. However, some breaches, like unapproved transfers or a third failed restaurant inspection, cannot be corrected.
Upon termination, the franchisee must stop operating the restaurant, cease representing themselves as a current or former franchisee, discontinue using Chesters' confidential information, trademarks, and trade dress, complete de-identification of the restaurant, and pay all outstanding amounts owed to Chesters. Prospective franchisees should carefully consider these limitations and obligations before entering into a franchise agreement with Chesters.