Does Chatime assume liability for the success or failure of the Franchised Business conducted by the Franchisee?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
10.1 Indemnity
- (1) Franchisee Parties indemnify Franchisor and each of its Affiliates (Chatime Group) against all:
- (a) Losses incurred by the Chatime Group;
- (b) Liabilities incurred by the Chatime Group; and
- (c) All Legal Costs and other Costs and expenses incurred by the Chatime Group in connection with a demand, action, arbitration, or other proceeding (including mediation, compromise, out of court settlement or appeal),
arising directly or indirectly as a result of or in connection with:
- (d) A breach by Franchisee Parties of this Agreement or any Collateral Agreement;
- (e) Any injury to, or loss of property of, any person in or on premises from which the business is conducted;
- (f) Franchisee's taxes, liabilities or Costs of The Franchised Business;
- (g) Any negligent or willful act or omission of Franchisee, its employees, agents, servants, or contractors; and
- (h) Any warranty, promise, or representation made by Franchisee Parties or any employee, agent, or other person acting on behalf of Franchisee Parties being incomplete, inaccurate, or misleading.
- (2) Franchisor's rights at law and under this Agreement, including its right to be indemnified under this clause, are not affected by:
- (a) Franchisor ending the Franchise or the termination of any Collateral Agreement;
- (b) Franchisor accepting Franchisee's repudiation of this Agreement or any related Agreement; or
- (c) Anything else.
10.2 Limitation of Liability
To the extent permitted by law, Franchisor will have no liability in relation to:
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, Chatime does not assume liability for the success or failure of the Franchised Business. Instead, the agreement stipulates a limitation of liability for the Franchisor.
Specifically, the franchisee is required to indemnify Chatime against losses, liabilities, legal costs, and expenses arising from breaches of the agreement, injuries or property loss on the premises, the franchisee's taxes or costs, negligence, and inaccurate representations. This means the franchisee is responsible for covering Chatime's costs in these situations.
Furthermore, Chatime's rights are not affected by the termination of the franchise agreement or any related agreements. This underscores that the franchisee bears the responsibility for the business's operations and any associated liabilities, while Chatime's liability is limited to the extent permitted by law.