What constitutes an 'Affiliate' of Chatime, according to the FDD?

According to Chatime's 2025 Franchise Disclosure Document, an 'Affiliate' is defined as any Person that directly or indirectly Controls, is Controlled by, or is under Common Control or Controlling Interest with, a specified Person. This definition is important for prospective franchisees to understand because it clarifies the scope of Chatime's network and the entities with which they may interact.

In simpler terms, an affiliate is any entity that has a direct or indirect relationship with Chatime through ownership or control. This could include parent companies, subsidiaries, or other related businesses that are either controlled by Chatime, control Chatime, or are under common control with Chatime. The definition is broad, encompassing various forms of control, whether direct or indirect, which means that the relationship doesn't necessarily have to be an obvious one.

This definition has several implications for a franchisee. For example, Chatime retains rights with respect to Outlets, the Intellectual Property and the sale of Raw Materials and other Products and any other products and services, anywhere in the world including, without limitation, the rights to operate or grant others the right to operate Outlets under or in association with the Marks or any other trademarks or service marks at such locations outside the Territory, and on such terms and conditions as Chatime, in its sole discretion, deems appropriate, on behalf of itself and its Affiliates. Also, Developer Parties indemnify Chatime and each of its Affiliates (Chatime Group) against all Losses incurred by the Chatime Group; Liabilities incurred by the Chatime Group; and 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 certain actions.

Understanding who Chatime considers an affiliate is crucial for franchisees to assess potential conflicts of interest, understand the scope of competitive activities Chatime or its related entities might undertake, and clarify responsibilities and liabilities within the Chatime network. Franchisees should carefully consider this definition and how it might affect their operations and relationship with Chatime.