According to the Chatime FDD, where is the Franchisee specified?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
(49) Owners means all Persons holding Ownership Interests exceeding 10% of the total Ownership Interests in Franchisee and all Persons who have other direct or indirect interests in Franchisee or this Agreement (the Persons or entities who are Owners as at the date of this Agreement are listed in Section 2 of Schedule 1 to this Agreement).
(50) Ownership Interest means a direct or indirect, disclosed or undisclosed, legal or beneficial ownership interest or voting right, including, without limitation:
(a) In relation to a corporation, the ownership of shares or other equity interests in the company;
(b) In relation to a limited liability company, the ownership of membership interests or other equity interests in the company;
(c) In relation to a partnership, the ownership of a general or limited partnership interest;
(d) In relation to a trust, the ownership of the beneficial interest of such trust; or
(e) The right to cast some or all of the votes associated with such shares or interests.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the term 'Franchisee' is defined within the agreement. Specifically, the definition of 'Owners' includes all persons holding ownership interests exceeding 10% of the total Ownership Interests in Franchisee. It also includes all Persons who have other direct or indirect interests in Franchisee or this Agreement, with the Persons or entities who are Owners as at the date of this Agreement listed in Section 2 of Schedule 1 to this Agreement.
This definition is important because it clarifies who is considered an 'Owner' of the Franchisee entity, which has implications for various aspects of the franchise agreement. For example, it determines who needs to attend initial training provided by Chatime. The FDD states that Chatime will provide initial training to the Franchisee, Guarantor, and any senior managers nominated by Franchisor (up to a maximum of 4 people).
Furthermore, the FDD specifies several obligations and restrictions applicable to the Franchisee. For instance, the Franchisee must comply with the Approved Suppliers' payment and trading terms for Raw Materials and other Products. The Franchisee is also responsible for adhering to the Chatime Menu and sourcing products only from Approved Suppliers. Understanding these definitions and obligations is crucial for prospective franchisees to ensure they are aware of their responsibilities and the scope of the agreement.