What constitutes an 'Affiliate' in the context of the Chatime franchise agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
1.1 Definitions
The following words have these meanings in this Agreement unless the contrary intention appears:
- (1) Affiliate means any Person that directly or indirectly Controls, that is directly or indirectly Controlled by, or that is under Common Control or Controlling Interest with, a specified Person.
- (2) Agency means any governmental entity or agency.
- (3) Agreement means this document, including any schedule or attachments to it.
- (4) Alternative Methods of Distribution means any alternative distribution methods or channels (such as sales to grocery stores, sales via direct mail, subscriptions, or the internet, or other alternative distribution methods or channels.
- (5) Approved Supplier means Franchisor or a supplier or suppliers approved in writing by Franchisor for the supply of Products and equipment to Developer and/or Franchisees.
- (6) Business Day means a day that is not a Saturday or Sunday or any other day which is a
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to the 2025 Chatime Franchise Disclosure Document, an 'Affiliate' is defined as any entity that directly or indirectly controls, is controlled by, or is under common control with a specified person. This control can be exerted through ownership of more than 50% of the voting interest, by contract, or through other means.
For a prospective Chatime franchisee, this definition is important because it clarifies the scope of entities that are related to the franchisor and could potentially impact the franchise agreement. For example, Chatime, on behalf of itself and its affiliates, retains rights regarding outlets, intellectual property, and the sale of raw materials. This means that decisions made by Chatime can be influenced by or can affect its affiliates, and vice versa.
The definition of 'Affiliate' also has implications for confidentiality. Confidential information includes data concerning the business and financial affairs of Chatime and its affiliates, including franchisee information. This means that information shared with Chatime could also be accessible to its affiliates. Understanding the definition of 'Affiliate' helps a franchisee understand the network of related entities and how they might interact with the franchise.
Furthermore, the FDD mentions that there can be agreements between the franchisee and an affiliate of Chatime in connection with the franchise agreement and the franchised business. This highlights the importance of understanding who the affiliates are, as franchisees may have dealings with these related entities during the course of their franchise operation.