Does the Chatime definition of 'Affiliate' include entities indirectly controlled by the specified person?

According to Chatime's 2025 Franchise Disclosure Document, the definition of "Affiliate" includes entities indirectly controlled by a specified person. Specifically, an affiliate is any person that directly or indirectly controls, is directly or indirectly controlled by, or is under common control or controlling interest with, a specified person.

This definition is important for prospective franchisees because it clarifies the scope of relationships that Chatime considers to be affiliated. This can have implications for various aspects of the franchise agreement, such as restrictions on competition, transfer of ownership, and liability. For example, if a franchisee is owned or controlled by another business entity, that entity may be considered an affiliate and subject to certain obligations or restrictions under the franchise agreement.

The inclusion of indirect control in the definition of "Affiliate" is a common practice in franchising. It prevents franchisees from circumventing the terms of the franchise agreement by structuring ownership or control through multiple layers of entities. This broad definition ensures that Chatime can effectively enforce its rights and protect its brand standards across its network of franchisees and related parties.

Prospective Chatime franchisees should carefully review the definition of "Affiliate" in the franchise agreement and understand its implications for their specific circumstances. They should also seek legal counsel to ensure they fully understand their rights and obligations under the franchise agreement, particularly in relation to affiliated entities.