How is 'Control, Controlled by, or under Common Control or Controlling Interest' defined in the Chatime franchise agreement?

According to Chatime's 2025 Franchise Disclosure Document, the terms 'Control, Controlled by, or under Common Control or Controlling Interest' are specifically defined within the franchise agreement. This definition is important because it clarifies the relationships between different entities that could be affiliated with the franchisee or franchisor. Understanding this definition is crucial for determining liability and responsibility within the Chatime franchise system.

The Chatime franchise agreement defines these terms as the "direct or indirect possession of the power to direct or cause the direction of the management or policies of any other Person, whether through more than 50% of the ownership of voting interest, by contract, or otherwise." This means that an entity is considered to control another if it has the ability to influence its management or policies, regardless of whether this control is exerted through ownership, contractual agreements, or other means. The threshold of 'more than 50% of the ownership of voting interest' provides a clear benchmark for determining control based on ownership.

For a prospective Chatime franchisee, this definition has several implications. It clarifies who Chatime considers to be an affiliate, which can affect various aspects of the franchise agreement, including supplier relationships and competitive restrictions. It also helps franchisees understand the extent to which Chatime can influence their business operations. Franchisees should carefully consider this definition and how it might affect their business decisions and relationships with other entities.